Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

DEATH OF A MEMBER

Mr. Speaker: I regret to have to inform the House of the death of Konni Zilliacus, esquire, Members for Manchester, Gorton, and I desire on behalf of the House to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

PETITION

Baguley Hall, Wythenshawe

Mr. Alfred Morris: With your permission, Mr. Speaker, and that of the House, I seek leave to table a Petition which represents the views of more than 6,400 residents of Manchester and other places who are deeply concerned to stop the demolition of Baguley Hall, Wythenshawe, and to preserve this historic building for posterity.
I beg you, Mr. Speaker, to instruct the Clerk of the House to read this Petition to the House.
The CLERK of the HOUSE read the Petition, which was as follows:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of residents of Manchester and other places.
SHEWETH
That whereas Baguley Hall, Wythenshawe, is one of the finest timber buildings in Europe, and of outstanding historical and architectural importance, and whereas its demolition would be emphatically contrary to the best interests of Manchester and Great Britain as a whole, wherefore your Petitioners pray your honourable House will take steps to ensure that Baguley Hall, Wythenshawe, shall not be demolished in accordance with the decision taken by the Manchester City Corporation on Wednesday, 1st February, 1967, and that everything possible be done to preserve this historic building for posterity. Wherefore your Petitioners, as in duty bound, will ever pray, &amp;c.

To lie upon the Table.

Orders of the Day — NATIONAL INSURANCE (No. 2) BILL

Considered in Committee.

[Mr. SYDNEY IRVING in the Chair]

Clause 1.—(AMENDMENTS AS TO CONTRIBUTIONS AND BENEFIT UNDER INSURANCE ACT.)

11.8 a.m.

Miss Mervyn Pike: I beg to move Amendment No. 2 in page 1, line 8, at the end to insert:
'except in the case of employees whose family income is below the supplementary benefit level, in which case the provisions set out in Schedule 1 of the Insurance Act shall continue to apply'.
In this Amendment we are asking for minimum humanity and elementary justice. We are asking only that the 2s. increase shall not be payable where the income is below the supplementary benefit level and cannot be made up to that level because the wage earner is at work.
The Committee will recognise that in effect this is primarily a probing Amendment. No doubt the drafting is wrong and the Amendment may not even be in the most suitable place, but we wish to draw attention to the problem of the low wage earner in the context of the Bill. We want also to give the Minister an opportunity to let us know what she is prepared to do to meet this problem. We all recognise—and I think that the right hon. Lady herself is very conscious of this—that there has been a dramatic rise in the cost of the stamp. In this instance the extra and quite disproportionate burden is upon the low wage earner.
Since the present Government came to office there will have been an increase of 4s. a week on the stamp. There has been inflation and prices have risen by about l0·7 per cent. and are still rising. There has been a wage freeze and, as we all recognise, the low wage earner has probably been hardest hit and is still at a great disadvantage compared with other sections of the community. There has been what is known as an


industrial shakeout and this again has hit the low wage earner hardest, because there has been less overtime, less part-time work and fewer opportunities for these people to augment their wages in any way.
Who are the people in this category? The largest body of them are unskilled workers and a very large proportion of those unskilled workers work in industries like the nationalised industries where there is no hope of getting the sort of productivity agreements and bonus incentives and overtime which would give them any hope of being able to see any fundamental increase in their wages in future.
There is very little hope of overtime for them. With the lower profit margins in industry and continuing difficulties there, it seems as if they will remain at the bottom of the queue. I am conscious of this fact because I am connected with industry in the West Country, and the hon. Member for Plymouth, Sutton (Dr. David Owen) probably has some of his constituents working for my firm. Quite recently we have been engaged in wage negotiations and, to our great sorrow, it is the lowest paid wage-earners for whom we have been unable to get an increase whereas the higher paid, highly skilled people, have had theirs.
Industry as a whole is facing this problem, and no matter how hard we who have responsibiliity for wage negotiations work these people are still at the bottom. They are probably the greatest proportion. Many are partially handicapped, some through physical disability, some through poor health, inadequacy, intellectual or personal, and they find it very difficult to compete in a highly competitive labour market.
Many are women. Perhaps the largest proportion in this category are women. They would be helped particularly by this Amendment, because women in full-time and low-paid employment are finding times very difficult. Poverty is not just a question of large families, as sometimes it has been thought and argued, inside and outside of this House. The Minister's recent survey into family circumstances has shown that the biggest single cause of poverty is, without doubt, low wage earnings aggravated by the harsh working of the wages stop.
The Minister has been very coy about this survey. We had a debate on the Second Reading of this Bill on Tuesday and then, without any fanfare or publicity, as we would have expected, out comes this very important survey, a very difficult one to digest. It came out as quietly as a mouse. The right hon. Lady may have read The Guardian of yesterday which says:
You might think that a Ministry of Social Security report revealing that over a million children are living in poverty—double the most gloomy unofficial estimates—would have got a lot of Press attention. The "Guardian" had a story yesterday; so did the "Sun". No other paper so much as mentioned it, and not without some excuse. The Ministry gave no advance warning it was coming. No explanatory Press conference (a stock Whitehall procedure in such cases) was held. No extra copies were available. The 160-page report went out to newspapers on a late delivery run, so that the "Guardian" didn't get a copy until 6·45—too late to raise specific questions with the MSS. The official Press notes attached were a masterpiece of tangled medium. It was highly difficult, in the time available, to see the essential story, never mind do it full justice.
The right hon. Lady is not normally coy about getting publicity for these important documents, and I hope that in future she will see that such important documents not only comes out in time for us to study before an important debate such as we have on Tuesday, but that it gets the greatest possible publicity. I am sure that she wants everyone to recognise what the real problem is. New Society puts this very well. It says:
… it is not so much the general picture as the break-down which is really significant. Of the 345,000 below-scale families, 125,000 had fathers in full-time jobs. Some 60,000 families had sick fathers at the time of the survey, 40,000 had fathers unemployed, and about 75,000 were fatherless. The remainder included some 20,000 with fathers on holiday. … Of the 135,000 families receiving national assistance last June and July, 15,000 did not receive full allowances because of the wages stop and about 70,000 could not be paid assistance at all because the fathers were in full-time work.
These are the people whom we are trying to help in this Amendment. We want to know what does the hon. Lady think about it? We all know what she said in Opposition. I will not bore her or the Committee with any more extracts, of what she said, but I can summarise it by saying that she thought that the incidence of the contribution was savage poll-tax on the low wage-earner and the


wage stop should be abandoned. I am not at all sure that she still does not hold these views now but she has greater difficulty in trying to find ways in which to make that possible. We are trying to help here.
11.15 a.m.
This is what we propose: the 2s. increase should not be payable where the income is below the supplementary level. There is no easy solution to this and we recognise this. That is why I said at the beginning that we did not pretend that this was the ideal solution, or any more than a probing Amendment. It is not an easy solution, but it is the Government's responsibility, if they persist in bringing in measures which aggravate an already difficult situation. They cannot dodge their responsibility for finding a solution to the problems that they have caused.

Mr. James Griffiths: The benefits provided by this Bill call for this contribution. If it is to be reduced for people in low income groups, how does she propose to make up the difference, from the Treasury or from the public?

Miss Pike: My own view is that this could come out of Exchequer contributions, because this is a point of selectivity to which I would subscribe. This word "selectivity" is being bandied about just now. It is not my responsibility, but the Government's to find out how to do this, and to find the most just way to obtain the money. I am not advocating that the already savage increase in contribution should in any way be increased.
In this difficult situation we can ask the Government to find the solution which will bring justice to this particular category of low wage-earners. We cannot necessarily help them by increasing child allowance because, as the Report has pointed out, many of these families have only two children, some only one. In some cases the increase in child allowance would not necessarily bring any relief at all.
How would this proposal work? The onus would be on the wage-earners to satisfy the Commission that their wages are insufficient to bring them up to the level of the supplementary benefit. In these circumstances, there would be the

need for a massive publicity campaign, to ensure that the rights of the people were known to them. None of us would have any hesitation about that, because the more we publicise these low incomes, the more hope there is that something can be done about them.
One of the great difficulties would be the difficulty of fluctuating earnings. I do not think that this would necessarily be so insurmountable because there would be comparatively few people involved at each local office. The Ministry has managed to overcome difficulties of this type before and to operate a complicated earnings rule on pensions, without the administrative machine falling apart. There is no need for there to be any difficulty on this score.
There may be those who say that this is a new principle which should not be embarked upon in what is a stop-gap emergency—at least we hope that it is. However this is not a new principle. The principle that contributions should take account of earnings is one which is, to some extent, already accepted. We have lower contributions for those under the age of 18. For those over 18 there is a special low contribution where the earnings fall below £5 a week. This would be bringing help to those in need without breaching any principle.
I have acknowledged that this is probably not the best way of dealing with the problem. The best way would be to recast the whole system, but I obviously cannot suggest that now. This is a stop-gap suggestion for a stop-gap Bill. While the right hon. Lady is thinking of these things, and the Cabinet arguing about how best to do something, this would be a means of making certain that we do not put any extra burden on this category of people. To a great extent the Government have brought this problem upon themselves. I do not say that the problem of the low wage earner is not something which the Government have inherited. All of us want to do something about it as quickly as possible. But the problem has been aggravated substantially over the past two or three years by the measures which the Government have taken.
Therefore, while the Government are thinking of ways of getting us out of the difficulties, they should, first, tell us


what their plans are and, secondly, accept an Amendment such as this which would, in the short term, help these people.

Mr. James Griffiths: I listened with great interest to what the hon. Lady the Member for Melton (Miss Pike) said. I intervene to say a few words about the problem of contributions.

Mr. Douglas Houghton: On a point of order. I apologise to my right hon. Friend the Member for Llanelly (Mr. James Griffiths) for interrupting him, but I am anxious about the scope of the debate on the Amendment. I hope to catch your eye, Mr. Irving, to deal with the wider question of the level of flat rate contributions, but not in the narrow context of the Amendment, which seeks only to exempt certain classes of people below the supplementary benefit level of income from paying the increased contribution.
If we are to have a wider discussion on the contribution level generally and the possibility of alternatives, I fear that I may seek to catch your eye after the main debate is over, which would be only wasting the Committee's time. May I ask when I should seek to catch your eye on the wider question of the contribution level? I proposed to do so on the Question, "That the Clause stand part of the Bill", but if it is suitable to do that in this debate I shall be guided accordingly.

The Deputy Chairman (Mr. Sydney Irving): I was tempted on one occasion to intervene in the speech of the hon. Lady the Member for Melton (Miss Pike) when she went a little wide of the Amendment. It would be more appropriate if the wider questions were left until later. I hope that hon. Members will deal with the Amendment, which concerns the supplementary benefit level in relation to contributions.

Mr. Griffiths: If the Committee would permit a personal reference, it is 21 years ago this month since the National Insurance Act, 1946, received the Royal Assent. I express amazement that it has stood as a social benefit structure for 21 years without fundamental amendment. It was my job to translate the Beveridge Report into an Act. Beveridge recommended, from all the evidence

available to him and on the basis of his wide experience, that what the people wanted was a comprehensive scheme which brought in everybody and which was based on flat rate contributions and flat rate benefits.
Eventually I had to fix the weekly contribution. The first decision which I made was that I would treat every man and woman of 18 years of age and over as an adult. It was the first Act to recognise that people of 18 years of age were adults. I hope that in the not too distant future we shall be dealing with that age in another context. I made up my mind that the maximum flat rate contribution which could be fixed, having regard to the varying incomes in the country, was 5s. a week. It was 4s. 11d. for the first two or three years and 5s. 3d. for a time afterwards. Ever since, the contribution has been increased at various times.
What the hon. Lady asks for in the Amendment is that those with an income below a certain level should be exempted from paying the extra 2s. I intervened in her speech to ask how she proposed that the difference should be made up. I gather that she would make up the amount of the lost contributions which would be required to pay the benefits by taking it from the Exchequer.

Miss Pike: I indicated that I regarded this very much as a short-term, stop-gap measure. Something must be done. That is why, particularly in this instance, I should not want to go into the whole question of graduated contributions.

Mr. Griffiths: It is right that the Committee should be clear about the Amendment so that we know its consequences. If we were to accept the Amendment, could the hon. Lady give us an estimate of the number of men and women who would be exempted? That would give us an idea of the amount of money involved and how much would have to come from the Treasury. That amount would have to be made up in the next year's Budget by taxation.
I think that the time is overdue for us to go over to wage-related contributions and benefits. I still accept the principle of from each of according to his ability to pay and to each according to his need. I should like the country to have such a developed social consciousness


that contributions would be paid in accordance with a person's ability to pay and that benefits would be paid in accordance with need. Unfortunately, we are not ready for this. When we go over to a wage-related pension scheme, contributions will be related to wages and salaries, and so will benefits. This is a question of transferring the class structure of industry to our social services. People who are sick will get benefits related to their incomes. My own party is committed to this. My right hon. Friend, for whom I have a deep regard—and, on this 21st anniversary, may I say what a very good Minister she is—is committed to it.
Reference has been made to the report which I hope we shall discuss later. As a trade unionist, may I say that the interesting thing about all these reports is the number of people who are still being paid low wages. If there are hundreds of thousands of families in which the breadwinner is not earning enough to sustain his family, I hope that we shall not confine our attention to consider the relationship of that matter to the social services but that we shall consider it in relation to the wage structure.
The whole trend is towards what is called selectivity. That is a lovely word. We had a debate in the House in which we talked about selectivity. I said, "What is meant by 'selectivity'? Who will select?" The hon. Lady said that, if the Amendment were carried, the onus to prove that the contributor was justified in getting exemption from paying the extra contribution would be put on him or her. If the Amendment were carried, to whom would a low paid worker have to apply? To his employer?

Miss Pike: I said that he would apply to the Supplementary Benefits Commission.

Mr. Griffiths: That means that if the Amendment were carried a man at work in a pit, in a factory, or in industry would he able to say, "This 2s. increase is more than I can bear. By an Amendment proposed by the Conservative Party in Committee. I am entitled to go to the Commission and say that I cannot pay the 2s. increase". This is introducing a means test into contributions. I say to my young colleagues: watch this tendency.

This leads us back to the means test. By using nice terms about selectivity, that is what hon. Members opposite mean.
11.30 a.m.
Later when we discuss the social insurance scheme as a whole, including family allowances, there may be some kinds of selectivity to which I would agree. Some were mentioned by my hon. Friend the Member for Bedwellty (Mr. Finch), who speaks with great experience in this matter, but they do not include selectivity based on means. This is not the way to tackle this problem. We should realise that all our economic difficulties these problems did not first arise in 1967. They had pressed upon us for many years, and will do so for a long time to come. I am sure that the hon. Lady the Member for Melton will not say that there were no low-paid workers when her Government were in office.
One thing which worries me as an old trade unionist is that the disparity between the lowest- and the highest-paid is getting greater all the time, but this Amendment would not be the way to deal with that problem. It is a polite way of introducing a means test into the Bill. I welcome the Bill and I thank my right hon. Friend for it, as I am sure the people of the country will also. I hope that in the course of this Parliament—probably my last—we shall go on to recast the scheme in such a way as to leave the essential condition that in whatever form contributions are made benefits will be paid as of right and will satisfy, not only the need, but the dignity of those concerned.

Mr. Marcus Worsley: I support the Amendment. I congratulate the right hon. Member for Llanelly (Mr. James Griffiths) on his "twenty-first birthday". The fact that the Scheme as he devised it has lasted for so long is a tribute to his legislative ability, but I think he will agree that it has lasted for too long. Perhaps it should have reached 16 years of age, the school leaving age, and then been replaced. One of my regrets is that the course of affairs under the present Government shows their extraordinary tardiness in tackling this problem and replacing the scheme.
Heavy weather has been made about the proposition which my hon. Friend the Member for Melton (Miss Pike) described


as a probing Amendment, and the details have been gone into in a heavy-handed way. This Government seem to have no idea of the problems created over a very wide field by the steeply rising rate of direct poll tax. If they had any idea of these problems they would not have introduced the Selective Employment Tax, which has aggravated the problems in an extraordinary form. It is up to this Government to look at the problem presented by the poll tax and to produce a better solution, if they can, than that put forward by my hon. Friend. Merely to criticise what she said and do nothing about it is not good enough.
I wonder if hon. Members really appreciate the difficulties caused in the employment of the elderly, in part-time employment at any age, and in employment of the younger wage-earner, by this extremely heavy poll tax element in the stamp plus S.E.T. It is easy enough to poke holes in this proposition, but the Government must come forward with a clear statement that they realise the difficulties caused in employment of elderly and part-time workers and that as a result they intend seriously to tackle the problems of the direct poll tax.
I understand that the right hon. Member for Sowerby (Mr. Houghton) intends to catch your eye, Mr. Irving, to describe in detail how he would tackle the problem. I shall listen with great interest to him, but I want first to hear from the Government what ideas they have.

The Minister of Social Security (Miss Margaret Herbison): I want to deal with a number of points which have been raised by the hon. Lady the Member for Melton (Miss Pike), who moved the Amendment. Before doing so I wish to congratulate my right hon. Friend the Member for Llanelly (Mr. James Griffiths). His name is revered throughout the whole of Britain for the work he did between 1945 and 1950 in our first Labour Government with a real majority. I also thank him for the kind things he said about me.

Mr. James Griffiths: They were fully deserved.

Miss Herbison: The hon. Lady drew attention to the survey which was published earlier this week. She said that I had been very coy about it. I assure

her that I had no intention of doing a disservice either to this House or to the Press in the manner in which the survey was published. The facts about the number of poor families and the number of children involved were given to the House many months ago. There is a great deal of further information in this report which I think will help us to deal, not only with cash payments for families for which I am responsible, but also with many of the other problems with which low-wage earning families are faced.
The hon. Lady will accept that this is not something new in our nation. We have always had poor families. Perhaps at least the Opposition will pay some credit to the Government for doing the research which was necessary to find exactly how large the problem is. The hon. Lady said that in general our policies have made matters worse. I look to my country, Scotland. We have fewer unemployed today—many thousands fewer, and they are the people who would be hit by the wage stop—than we had during the crisis when her party was in power. She called this a stop-gap Bill, but it is the same kind of Bill, an ordinary uprating Bill, as we have had during the 21 years since the Act was first put on the Statute Book. It is the same kind of Bill as we had during the 13 years when her party formed the Government.
The hon. Lady said that I spoke of the savage poll tax of the flat-rate contribution. I have not changed my mind one whit about the savage nature of that poll tax. When I raised the matter in Opposition my words, and the words of many of my hon. Friends, fell on stony ground. This is the second of the Bills dealing with this matter that I have brought forward. In each of them I have tried to ease just a little—I put it no higher than that—the burden that falls on the low wage earner. Previously, one decided what the combined contribution must be, and then that combined contribution was divided equally between the employer and the employee. Under the 1965 Act the combined contribution was 5s. 3d. We decided that the employer should pay 3s. 3d. and the employee 2s. The combined contribution this time is 4s. 3d. We decided 2s. 3d. for the employer and 2s. for the employee.
I am still extremely worried about the effect that even these increases—and I


think they are big increases—will have on the low-wage earner. But at least we have tried to ease it a little—till our scheme of earnings-related pensions is ready to bring before the House, and we have promised to do it within the lifetime of this Parliament. When we bring that before the House, then indeed we will have a chance of getting rid completely of this savage poll tax.
We might have been able to ease this burden if we had used the power which the previous Government left behind, the power under the 1959 Act. We could have raised more money. That was the intention of the Act of the hon. Lady's Government. We could have raised more money from the graduated pension scheme without any return in improved benefits from it. We think that the graduated pension scheme at present is a bad scheme, and we had no intention of taking more out of it than we could help. For these reasons what we have done is just ease a little and no more.
The hon. Lady said this was a probing Amendment. She seemed to think that all the man would have to do would be to go to the local social security office and say, "I am earning so much. I should only have to pay a contribution of 2s. less than the others." I agree very much with what my right hon. Friend said about this, and the indignity that would attach to that man and his family, when the payment of contributions is the responsibility of the employer. It is the employer who gets the stamps and sees that they are attached to the employee's card, and, of course, he takes the employee's share of the contribution from his wages. If the rate of contribution were payable according to the individual circumstances of the employee's family the employer would have either to ascertain week by week what the circumstances were or be told whether he could pay a lower contribution or not. Even if it were considered proper for employers to make the necessary inquiries—and I think there would be a great deal of criticism on this side of the Committee if it were considered proper—the extra work for the employers would be considerable, and inquiries of this sort would be bound to be very properly resented by the employees.
Supplementary benefit levels vary according to families' needs and the

employer could not decide the level appropriate to a particular employee, without knowing his other income, including his wife's earnings, besides his family's circumstances, and their ages—because in supplementary benefits the amount paid for children is paid according to age—and the rent payable. All these things are taken into account when we are dealing with what a family should have in supplementary benefit.
I do not want to labour this because I think I have said sufficient to show that, whether the onus could be put on the man himself—and it cannot, because the stamp is paid by the employer—or the employer should do, what I would consider an indignity, the probing into a man's circumstances, finding out also what his wife was earning, together with going to the supplementary benefit office to get rid of his 2s., but no other benefits involved, the whole of it so ludicrous that I am sure the hon. Lady was right when she said that this could be only a probing Amendment.
11.45 a.m.
We have a further Clause here, a Clause about which the Opposition is most critical, Clause 5, and we will deal with the criticism of that Clause when we come to it, but we have said that before the recess we will announce our full plans for family endowment. We shall not have been a Government for three years till this October, and if we are able before then to announce, as we intend to do, our plans for easing the burden of these families, I do not think any sensible person, taking into account all the other major changes which we have made in these two and a half years, will be as critical as the Opposition at the present time seems to be. We are deeply concerned about these families, and we intend at the earliest moment possible to help them.
I hope that what I have said will make the hon. Lady realise how impossible it would be for the Government to accept this Amendment, and perhaps now she will be ready to withdraw it.

Mr. Paul Dean: I shall not detain the Committee for more than a few seconds. The right hon. Lady has spent much of her time pointing out the difficulties which, we acknowledge, arise from this Amendment, but


she has not spent anything like so much time dealing with the very real problem to which this Amendment draws attention.
I admit that we have had the general picture before in this book, "Circumstances of Families", but only in the last day or two have we had the detailed figures. From what I can see in the very short time we have had to study them, there are something like 125,000 families in full-time work whose earnings are below the supplementary benefit level. So this is the number of families who are going to pay this increased contribution, but should they become entitled, should they go sick, or anything like that, they will get no benefit whatever for which they are paying an additional 2s. per week, but in many instances they will not get any additional supplementary benefit. Surely this is an example of selectivity in reverse so far as contributions are concerned.
The right hon. Gentleman the Member for Llanelly (Mr. James Griffiths) asked how this is to paid for. If we look at the Government Actuary's Report, we see that the increase in contributions which is being taken in this Bill is more than enough to meet the increase in benefit during the first few years, that this increase is partly going to meet a deficit on the National Insurance Scheme as a whole. So not only are these people paying something extra for an additional benefit which they are not going to get, but they are also helping to finance the deficit on the National Insurance Scheme as a whole. I am bound to say that this really is very rough and very unfair on these people.
The right hon. Gentleman said that what this Amendment really amounts to is the introducing of a means test into contributions. I think that we all accept that if one is to have a graduated contribution, the same position will Apply—

Mr. James Griffiths: The hon. Gentleman will have heard the questions which I put to my right hon. Friend. I gather from what she said that the way in which the other Amendment would work would be that a lower-paid worker would seek exemption from the payments because of his low wages. That is what I mean by

a means test. It is entirely different from a wage-related scheme.

Mr. Dean: Obviously I misunderstood the right hon. Gentleman. However, the point is still valid. If one is to have a graduated contribution as opposed to a flat-rate contribution, someone has to look at the earnings of each individual to decide what the contribution shall be.
I do not wish to detain the Committee any longer. We are disappointed with the right hon. Lady's reply. She has told us that she will be making a further announcement on the problem before the summer is out, so, with those words, I beg to ask leave to withdraw the Amendment.

The Deputy Chairman: The hon. Lady who moved the Amendment must ask the leave of the Committee to withdraw it.

Miss Pike: Mr. Irving, as I said at the beginning, this is a probing Amendment and is meant to do nothing more than give an opportunity to the right hon. Lady to meet this point. As my hon. Friend the Member for Somerset, North (Mr. Dean) has said, in view of her assurance that before the House rises for the Summer Recess we shall have a full explanation of the Government's plans, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. Houghton: I intervene with some hesitation, because I know that a number of my hon. Friends wish to speak in this very short debate. If the Chancellor of the Exchequer had come to the Committee to say that he was proposing to increase taxation by £200 million a year with a view to the redistribution of income, the Committee would have been crowded and we should have debated it for a week. As it is, we had three hours the other evening, the two Front Bench speeches took over an hour, one other Privy Councillor spoke, which seemed quite enough, so I kept out of it.
I feel profoundly that nothing like enough discussion is taking place, at present about where we are going on social security. Minds have got into a groove.


The whole subject seems to have bored everyone, except the continual protest, which we all understand, of the 6½million people on retirement pension who say that it is not enough.
I regret one feature of my own activities in the Government in the last 2½years, and it is that we did not appoint an outside body before which this problem could have been ventilated so that we could know what people were thinking and what various organisations had to say about the future of social security. As it is, too much is going on behind closed doors. Far too little outside discussion is taking place. I regard my present function as the stimulator of discussion. I will throw anything into discussion which will start people talking, because we are in serious danger of deluding ourselves that, when the Government scheme comes out it will be generally acceptable and we shall proceed smoothly to legislation and the introduction of a new scheme. However, I predict that violent arguments will take place when the scheme appears, whereas they should be taking place now. That is the great drawback of present circumstances.
With that introduction. I want to say one thing about paragraph (e) of Clause 1. Here again, we have a problem of great importance, and it is the conditions under which people may postpone retirement.
The Government Actuary draws attention in his Report to the increasing trend towards retirement on reaching retirement age. This will have important social and economic consequences to the country in years to come. I have already reminded hon. Members of what the Government Actuary said about the demographic problems which confront us. He says that, by the year 1990, there will be 10 million people in this country over retirement age. What are we to do with them? We are to have a debate on Tuesday on the care of the elderly. By 1990, we shall be caring for a very substantial proportion of the population. The dependency factor will rise. The number of productive workers will not rise in proportion to the increase in the number of dependents, both old and young. This will impose a very heavy burden on those

who will have to find the resources necessary to maintain dependent persons.
Paragraph (e) offers a very slight encouragement to people to postpone retirement. Instead of getting 1s. extra for 12 extra contributions, they will get it for an extra 9 contributions. It is a pity that 9 is not easily divisible into 12, because a lot of people extend their working lives by a year at a time, and in many cases there is a compulsory retirement age. Factors of that kind may have an adverse effect upon whether 9 is the right figure or whether it should be, let us say, 6.
There are two reasons why people are retiring early. One is because the bonus for postponing it is not attractive enough. The other is because the opportunities for work after retirement age are gradually closing against both men and women. This is a most serious development socially and economically.
The question of the bonus is, after all, the only point dealt with in the Clause. Many people feel when they come to retirement age that, if they stay on at work, they give up the pension to which they are entitled while at the same time they have to continue to pay contributions and, when they do retire, the benefit for postponing retirement will not compensate them for having given up the pensions which they could have drawn. Against that it may be said that such a person will be in full-time work earning more than the pension, and that his the standard of living will be related to his earning capacity. He will not need the pension, and he will not have lost it. In reply, he will argue that he has lost it and is entitled to it now. People feel that they cannot forgo the pensions to which they are entitled, even if by staying at work they can earn more money. We have to cope with that sort of reasoning.
The inducements to remain at work should be improved dramatically in present circumstances, because it is most important that the encouragement to remain at work should be there. As a separate matter, not within the Clause, we should deal with problems of working after retirement age, compulsory retirement ages, conditions of occupational pension schemes, the impact on working life after pension age of modern production methods, and so on.

Mr. James Griffiths: My right hon. Friend has put forward a number of interesting suggestions. However, there are one or two questions which I should like to put to him. Does he think that his analysis leads to the conclusion that we ought to consider whether the retirement age should be raised, as it has been in Sweden? Alternatively, when he says that the inducements to stay at work must be increased dramatically, can he give an indication of what his drama would be like?

The Deputy Chairman: Order. The right hon. Member for Sowerby (Mr. Houghton) would be out of order if he pursued that line of debate.

Mr. James Griffiths: I do not think so.

The Deputy Chairman: It is not within the terms of the Clause.

Mr. Houghton: My right hon. Friend is very provocative on his birthday. I should like to respond to his challenge, but, as you point out, Mr. Irving, this would widen the debate far beyond the Clause. I am prepared to meet his question about the age of retirement, but at the moment I am afraid that I cannot give any illustration of the sort of dramatic improvement which I would wish to see made in the inducements to remain at work. I think that the figures would have to be gone into, but I would want to make it much more worth while than the Clause provides.
12 noon.
What I have to say now will be no criticism of the Minister, obviously not. I have the greatest admiration for her efficiency, her pertinacity, and her compassion for all those with whom her Ministry deals. Nor shall I make any party points. I think that this discussion is getting bedevilled with party political points. It needs to be discussed rationally.
I do not think that at the moment the Conservative Party has a contribution to make to the discussion so long as hon. Members opposite stick to the concept of flat rate contributions, and allow the private occupational schemes to take care of the rest. Under the Conservative proposals the flat rate contribution and the flat rate benefit would remain integral parts of the State scheme.

Miss Pike: No. The right hon. Gentleman has not got our scheme right.

Mr. Houghton: I have studied it carefully, and I thought that I has got it right. I do not want to continue a discussion with the Conservatives, because I have something much more important to say, but I understood that the occupational scheme was to play a much more important part in social security than hitherto, and indeed that private employers were to be required to provide occupational schemes. I understood that the main substance of social security would rest upon a flat rate scheme.

Miss Pike: No.

Mr. Houghton: The hon. Lady says "No" and some hon. Gentlemen opposite are shaking their heads. Perhaps we will have it explained more lucidly and fully some other time. If there is a contribution which can be made to the discussion on the lines on which I am proceeding, I shall welcome it.
The Minister has already replied to me, so I am not asking her to reply to me either, as will be clear from what I have to say.
Flat rate contributions are going up under the Bill. Why are they going up? One reason is that the Government do not propose to tap further the existing graduated scheme to provide more money to subsidise the flat rate scheme. The Minister made this clear a few moments ago, and it is on this theme that I shall address the Committee for a few moments.
I think everyone will agree that the Conservative graduated scheme was chiefly a financial enterprise. It was not a measure of social policy, so much as a device to meet the emerging deficit in the flat rate scheme by the introduction of a graduated scheme which provided substantial additional revenue, which was immediately swallowed up in financing the flat rate scheme. It exploited the concept of extra graduated benefits based on extra graduated contributions to finance the emerging deficit on the flat rate scheme. I think that during 1965–66 the graduated contributions yielded about £300 million more than was required to pay out graduated benefits, and indeed up to now, since the graduated scheme


started, £1,139 million has been collected in graduated contributions, which have almost wholly been used to finance the flat rate scheme.
By imposing the additional contribution on those getting over £9 a week, lower paid workers were spared the increase in flat rate contributions which would otherwise have been necessary to finance the increased flat rate pensions. There were many harsh things said about the scheme when it came in, and some of the legends about it are still being repeated, but in a sense it was a measure of payment according to ability to pay to mitigate the hardship of what was called the savage poll tax. I will concede that to the graduated scheme.
While it gave the graduated contributor less than value for money for his graduated contribution, it satisfied at least one standard of social justice by financing flat rate benefits out of contributions graduated according to earnings, and was therefore based on an assumption of ability to pay. But now, in the last two increases introduced by the Government, we have felt inhibited—and I say "we" because I was a party to the first of these two National Insurance Bills—from further exploiting this source of revenue.
With what result? The result is that the flat rate contribution is going up by more than it need have done had we been willing to continue the exploitation of the graduated contributions. We rejected the expedient of raising more money from the Tory swindle, and had perforce to make the savage poll tax more savage than before. I find this very worrying—2s. on the stamp, 4s. altogether, in two measures.
There is on the Notice Paper an Amendment on the Prices and Incomes Bill in the names of some of my hon. Friends to exempt from the conditions of the prices and incomes legislation increases related to the increases in National Insurance contributions. I think that this is the problem. The graduated contribution has remained the same. It is tainted money, but we cannot do without it at the moment, and we refuse to collect more of it. What we are really saying to the lower paid worker is, "You must pay more because we have scruples against swindling the higher-paid workers still more". I

think that this is the dilemma of the present situation.
Are we to continue to raise the flat rate contribution on orthodox lines, leaving the part played in the financial operations of the graduated scheme exactly where it is now? It is this issue which I pose to the Committee. We did it once in 1965. We are repeating it in 1967. Are we going to repeat it again? My prediction is that we shall. I believe that another measure of improvement in benefits on traditional lines will be necessary before a new and comprehensive graduated scheme can come into operation, and we are therefore going to steepen the poll tax because we shrink from tapping the graduated scheme for more.
I see no escape from this in present circumstances, unless we are prepared, as I think we should be, to recast the structure of contributions, even while we continue flat rate benefits. I think that the Government should consider, as an urgent matter a policy, switching over from flat rate contributions to graduated contributions as an interim measure to arrest the hardship of the ever-increasing flat rate contributions.
The question arises, "Do I mean the introduction of graduated contributions for flat rate benefits"? The answer is, "Yes, I do." At one time this would have been completely unacceptable to the trade union movement, but I do not believe that it would be today. This should be put to the unions as the only alternative to worsening the position of the lower-paid workers. It is not fair to them that we should go on like this.

The Deputy Chairman: Order. The right hon. Member is now getting to a Second Reading speech on the recasting of the whole social security system. That is wide of the terms of the Clause.

Mr. Houghton: I shall try to keep within the rules of order, Mr. Irving. I was very uneasy when I found that the scope of the Amendment was going rather wider than I had hoped. I hope to keep within order by saying that we are dealing with flat rate contributions, and are proposing to increase them. I am suggesting some means of meeting what we are all so worried about—the impact of the higher flat rate contribution on the lower-paid worker.
It is now 15s. 8d. a week for the male worker not contracted out. The measure of the transfer from the graduated contribution to the flat rate contribution is to be seen in what we charge the contracted-out man for the privilege of not being in the graduated scheme—not being there to be milked in order to finance flat-rate benefits. We charge him 2s. 5d. a week more than anybody else for the same flat rate benefit, because that is the premium he must pay for being exempted from the graduated contribution.
The compulsory levies go through three phases. First, they are small and uniform in amount; so small as not to justify differentiation or graduation. This is the universal flat rate contribution phase. That is how it began. That is how Income Tax began when it was 4d. in the £. The next phase arises because the contribution gets so high as to cause hardship to those with lower incomes, so that there is a switch to a proportionate basis of levy in scale with earnings, but not so high a proportion as to call for differential taxation according to family responsibilities. Then we come to the progressive tax—Income Tax—where this has got so high that it cannot be a flat rate and it cannot even be proportionate. It must be graduated and it must be progressive.
The Income Tax system has reached the stage where the proportionate tax is too heavy on the lower incomes and too light on the higher incomes. That is where we bring the graduated and progressive tax together. At the moment we are getting the worst of both worlds. We have a flat rate contribution and a proportionate contribution and, taking the two together, at some levels of income, they are now getting dangerously near to a breach of the fundamental principle of taxation, which is ability to pay.
This is what I am challenging. The truth is that we are prisoners of the National Insurance mythology. We cannot seem to break out of it. This is all being left for the major review. When that day dawns all will be put right, but until then a great deal will remain wrong.

Mr. Gwilym Roberts: Does not my right hon. Friend

agree that the great need is for more public discussion before this review eventually emerges? We keep being told, "This is being considered." Does not my right hon. Friend agree that there might be room for a Select Committee to go into the whole problem of social security, so that there could be more public discussion of this issue?

Mr. Houghton: I hope that my hon. Friend will forgive me; I touched on that aspect at the beginning of my speech, and I do not think that I should reopen it. I want to come to a conclusion.
The National Health Service is largely financed out of taxation, and a good deal of the money for the service is found from progressive taxation. There is little or no association between the benefits received under the National Health Service and the meagre and quite unfair flat rate National Health Service contribution. Only £163 million of the cost of the National Health Service is borne out of National Health Service contributions. Cash benefits—and here is where we come to minds in grooves—are no more based on the insurance principle than a positively grotesque relationship between the number of contributions and the title to benefit. Benefits are supposed to he what we have paid for directly by virtue of contributions.
This is nothing but a state of mind. We are bewitched by nomenclatures, and the ease with which the Chancellor of the Exchequer can levy this form of taxation by flat rate contribution is one of the miracles of fiscal policy.
When are we to get away from a concept which, if its inequities were translated into P.A.Y.E., would be denounced as grossly unfair, and would cause threats of a general strike? No Chancellor of the Exchequer could get away with what the Minister of Social Security can get away with in this mystique of contributions.
That is the end of the lecture. I am content to leave it there. What I have said may be noticed outside the Committee. It may be that discussion can go on, and that the trade union movement will examine the question. If I could see an early end to this situation I would not be so worried, but it will be three years at least, if not longer, before a new scheme can be brought into operation. In those circumstances I believe


that what I have drawn attention to is of great interim importance.

12.15 p.m.

Mr. Maurice Macmillan: The right hon. Member for Sowerby (Mr. Houghton) said that he wished to stimulate discussion. I agree that no better stimulator could be found than he, and I also agree that there is need for discussion on the lines suggested by him. I have only one complaint to make of his speech—he said practically everything that I wanted to say, and rather better. This means that I shall not delay the Committee for more than a few minutes.
The right hon. Gentleman's key point was that this last increase in the flat rate contribution has brought it home to hon. Members and to the country that this contribution is not an insurance contribution in any true sense of the word; it is another method of raising taxation. It should therefore be considered with the care for its social and economic consequences that we give to more normal methods of raising taxation in the Budget. It has escaped that searching examination through having the entirely fictitious name of an insurance contribution. I hasten to add that I am in no way trying to lessen or denigrate the great achievement of the right hon. Member for Llanelly (Mr. James Griffiths). I add my congratulations to him on his baby's coming of age.
It was only to be expected that with the change of circumstances and the rapid growth of technological advances that have taken place in the last 21 years a method which was quite satisfactory at the beginning has recently tended to put too heavy a burden on those in the lower income groups. The right hon. Gentleman showed part of our dilemma when he rightly abhorred the means test in the system which I cannot remember but he can, but suggested that our social legislation should be based on the principle, from each according to his ability, to each according to his needs. I am sure that this is what we all mean by that over-used word "selectivity".
My hon. Friend the Member for Melton (Miss Pike) pointed to the confusion which is brought in by these insurance contributions which have become bogus by producing a curious result of a wage-related system by which one pays more and gets more the better off one is. The

right hon. Member for Sowerby suggested that one should pay more if better off, but not necessarily get more, and I think that we would certainly agree with that.
This argument is the more urgent because, without trying to attribute blame or make a party political point, it is clear that the economy's natural growth will not allow us to finance considerable social expenditure increases without increases in taxation. Mr. Peter Jay's articles have made this fairly clear. Therefore, the form of the taxation and contribution becomes more important.
Both the weakness of the Tory graduated scheme—despite the right hon. Gentleman's acknowledgments—and this Government's reluctance to use it stemmed from this dilemma. Unless something is done urgently, there will be an inescapable need for a higher flat rate contribution, inevitably going up as benefits rise. My only real difference with the right hon. Gentleman is that, where he agrees in principle to a graduated contribution producing a flat-rate benefit, I would prefer to go the whole hog and call it a social security tax. The Committee should be grateful for the way in which he raised this very important point.

Dr. David Owen: My interest in this matter resulted from a study of the Government Actuary's Report. I agree with a great deal of what my right hon. Friend the Member for Sowerby (Mr. Houghton) said, but I will concentrate on the Report. The Report assumes a long-term unemployment rate of 2 per cent., but has this always been the case in such reports? It assumes also that earnings will be constant from the end of October 1967 to the financial year 2005. The former assumption could be pessimistic, but financially prudent, but I certainly hope that a 2 per cent. unemployment level will not be maintained until then, but the latter is sheer nonsense. The Actuary's table showing the income and outgoings of the scheme for the next four decades is therefore totally meaningless. If we are to debate this rationally, we should have figures which mean something.
It could be argued that in a "pay-as-you-go" scheme, increase in earnings would lead automatically to increases


in contributions and benefits, so that the balance of income and expenditure would not be affected, but I hope that the Minister will not argue that. When the National Insurance Scheme was purely flat-rate, this was probably broadly true, but, with graduated contributions and benefits, it is no longer true.
There is no reason to suppose that graduated contribution increments will rise pari passu with earnings. This depends on the relevant band of income. Expenditure on graduated contributions, moreover, cannot rise in line with earnings because under the Tory scheme the balance of benefits already earned can never be adjusted to take into account inflation or the real increase in earnings. Thus, these long-term estimates are pure fiction. But this is not so important as the short-term estimates, which determine the proposed increases in flat-rate contributions for this year. No hon. Member on this side does not bitterly regret the level of flat-rate contributions and believes that they have reached the highest tolerable level.
In the financial circumstances of the last few years, with considerable income restraint, examination of the flat-rate contribution becomes even more important. If unemployment falls, by how much can we expect the Fund to benefit? It will already be in surplus of £1 million for 1967–68 and £17 million for 1968–69. In answer to a Question about estimates of an increase in earnings which we must all accept will occur, on the basis of a 5 per cent. increase in the years 1967–68 and 1968–69, the Minister said that there would be an estimated increase of £2 million and £20 million respectively, which must be an estimate of increases almost certainly of £3 million and £38 million. This totals £41 million over two years, and these are serious figures when the contribution is as high as it is.
When one adds on what I hope will be a dramatic fall in unemployment, one sees that the flat-rate contributions are being fixed unnecessarily high because of what one hopes is a temporary unemployment level. These are technical financial questions which the Minister may not he able to answer immediately, but we are concerned that the flat-rate contribution is fixed so high in present circumstances and

that figures are based on these suppositions. I know that it can be argued that the Fund goes into deficit in later years, but these long-term considerations are, as I have shown, based on nonsense. I hope that the Committee will be given some illumination of this extraordinary Report.

Mr. John Pardoe: I am grateful to the right hon. Gentleman for Sowerby (Mr. Houghton) for having mentioned something which I have been hammering for some time, the iniquity of the whole tax structure. An Amendment of mine to the Clause put forward the alternative proposal of a social security tax, which I mentioned on Second Reading but had little time to develop. We must reorganise the financial structure of how we derive the income for these and other benefits. How best can we raise such a tax?
The simplest way is a straightforward payroll tax as a percentage of a firm's payroll, which would be levied by the employer, in deductions from his salary bill. An answer from the Chancellor of the Exchequer to me in the last three days said that, to pay for all the benefits listed in Appendix 1 of Cmnd. Paper 3320, which is about the whole list which we are discussing, would require a payroll tax of 10 per cent. This is the kind of figure which we are therefore discussing.
On the average wage of an adult man in industry, it would amount to about £2 a week—

The Deputy Chairman: Order. Particularly in view of the shortness of the Second Reading debate, I have allowed this debate to go a little wider than it probably should, but the hon. Gentleman is now seeking to raise the subject matter of an Amendment, which is out of order. One thing which he cannot do on this Question is deal with a payroll tax.

12.30 p.m.

Mr. Pardoe: I should be grateful for some enlightenment. The Clause deals with amendments to the contributions under the National Insurance Act, and I must admit that in my ignorance I imagined that any discussion of contributions would be in order. I should be grateful for some ruling.

The Deputy Chairman: I am not saying that the discussion of contributions as


they are in the Clause is not in order. It is perfectly in order. But the hon. Member is talking about a payroll tax, which I understand to be entirely different from the form of contribution which is part of the Clause. He may make a brief reference to it. I certainly allowed the right hon. Member for Sowerby (Mr. Houghton) some latitude in that respect, but the hon. Member for Cornwall, North (Mr. Pardoe) is now going into some detail about the payroll tax.

Mr. Pardoe: I fully understand, Mr. Irving, and I will be brief. I was pointing out that I was not simply asking the Government to think about doing something different; I was proposing something specific. But I agree that we must not go into great detail, and I accept your Ruling. Perhaps I have already said enough to get across to the House the main lines of my argument.
May I follow the right hon. Member for Sowerby in his remarks about graduated contributions and a flat rate pension? I entirely agree with him about flat rate pensions. I see no argument at all for relating State pensions to incomes. The State should keep out of this field. It is trying to create tailor-made pensions, bespoke pension schemes. My view is that the State should content itself with providing a basic level which is adequate for the person to live on.

Mr. Houghton: The hon. Member misunderstands what I said. I was dealing with the contributions and the need to get rid of the hardship of the flat rate contribution. I was not advocating the retention of flat-rate benefits as a permanent feature of the scheme. This is an interim Measure to resolve our financial dilemma.

Mr. Pardoe: In that case I will not claim the right hon. Gentleman in support of my attitude. In my view there should not be a flat-rate contribution, because that is a poll tax, but the pensions should be flat rate and should be related generally to average earnings. I will deal with that in an Amendment which has been selected for later debate. It would be as well to remind the Committee that the National Insurance budget in 1964 amounted to £1,600 million whereas the total amount of money spent in contributions to voluntary schemes and

occupational schemes was £2,600 million. That is an enormously important field which we should wholeheartedly encourage.

Mr. Terence L. Higgins: I intervene briefly but by way of a paving statement in anticipation of a new Clause which we shall debate later.
I was glad to hear at any rate part of the speech of the right hon. Member for Sowerby (Mr. Houghton), and I am sorry that I missed the beginning of it, for clearly it was a speech of great distinction. It seemed to strike at the whole flaw in the present basis on which we organise the pensions system. He described the present system of contributions as a miracle of fiscal policy. It is surely clear to anyone who has given only the most superficial examination to the subject, let alone those who have studied it in detail, that the whole idea that the system is on an actuarial basis is complete and utter nonsense. The sooner that the Minister and her colleagues can say that clearly and without shame, the more likely we are to find a real solution to these social problems.
Until that is done, we shall find the mythology of the contributions principle arising time and again—the idea that because one was fortunate enough to be allowed to contribute a specified number of contributions, one shall receive any future benefit which the State decides to give out of general taxation and other fees and out of levies which are imposed by the Clause on people who have not yet been able to obtain benefit. I am, therefore, sure that the House was grateful for the great authority which the right hon. Member brought to the argument.
The fact is that these contributions are extremely regressive. That is common ground and is obvious to any hon. Member. Certainly it is contrary to the principles which many hon. Members opposite have put forward in the past. These contributions hit very heavily the old-age non-pensioners, who are to make contributions to those who in many cases are better off than they are themselves. I shall return to this point later, but I hope that we shall have some clarification from the Minister of her views about what she thinks will happen in respect of the lowest-paid workers who may be subject to the prices and incomes policy.
During the Committee stage of the present Prices and Incomes Bill we had no clear statement from the First Secretary of State about what is the position of passing on these contributions. It is not in the least clear, if a wage claim is put in by the lowest paid workers to cover the increase in contributions, whether that is contrary to the prices and incomes policy. The nearest we came to a decision from the First Secretary of State was that it would be contrary to the policy if it were simply a claim covering the contribution, but he had not made up his mind about what the position would be in respect of those claims which were put in partly on account of these contributions. I therefore hope that the Minister will give some idea whether she feels that a wage claim from lowest-paid workers would be justified to cover the regressive element of this tax.
What the Government are doing is failing to control inflation—if we take the entire period from last July to two years hence, this will be even more apparent—and they are imposing this kind of regressive tax in order to compensate the pensioners. The right thing to do is to take every step possible to stop inflation. It is true that under Conservative Government pensions were raised not just to compensate for the cost of living but in line with earnings, but at the same time the general burden of taxation, including this type of contribution, was reduced in that period. It is right, therefore, when considering the contribution proposed in the Bill, that we should regard it as a tax. That is what it is.

Mr. J. J. Mendelson: The hon. Member must not go too far in making these party claims. While he and his hon. Friends are criticising this aspect of the new contributions, his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), on behalf of his party, is putting forward schemes of tax reform which would shift the burden much more away from those who have high incomes to those who have not.

Mr. Higgins: I should be out of order if I pursued that point in too much detail, but under the previous Conservative Government not only were pen-

sions raised more satisfactorily than under the present Government but at the same time, because we achieved a higher level of economic growth, the general burden of taxation was reduced. That is not a party point but a question of fact.
Once we regard it as a tax increase, which it clearly is—and almost more appropriate to a Finance Bill—then we need to consider what the Prime Minister said on 20th June when he recorded a broadcast on the "State of the Nation". He was answering a question from Mr. Arthur Cockfield, Chairman of Boots, who said that all taxes had gone up. The question was, "Is it really the Government's intention to go on increasing taxes?" The Prime Minister replied, "I think that is a very fair question. The answer to that is no." And yet between the date when that broadcast was recorded and its transmission we had this increase in contributions introduced. This shows what credence one can put on the kind of assurance which we get from the Prime Minister. This should be regarded as a tax increase, and when considering the Clause we should consider what is involved in this increase in contributions.

Mrs. Lena Jeger (Holborn and St. Pancras, South): Obviously this wider discussion of the principles involved is the more interesting aspect of the debate. However, I wish to limit my remarks to some of the more actuarial aspects. If one accepts, as one must at present, the actuarial mythology to which my right hon. Friend the Member for Sowerby (Mr. Houghton) referred, then even within that mythology I cannot understand the calculations leading to the necessity for an increase of the size we are discussing.
In a Written Answer on 3rd July last, my right hon. Friend the Minister indicated that there had been an under estimate of about £20 million in the yield from graduated contributions, presuming a rise in earnings of 5 per cent. per annum. The idea that the Government actuary has worked on the instruction that earnings would remain constant fills me with anxiety. This would seem to rule out, for example, any progress towards equal pay for women workers. Is there to be no progress made towards a minimum wage, a concept for which


many of our friends in the trade union movement have been working for some time?
On the basis of a 5 per cent. increase in earnings—which I consider a modest expansion indeed—we are able to collect an additional £20 million. One can add to that the amount that would be saved by getting unemployment down to 2 per cent.—what I would regard, even then, as an unacceptably high level. I am modest about mathematics, but I estimate a saving of £13 million in terms of the benefits that would not have to be paid. If one goes on to add the admitted surplus of £17 million, one arrives at a total of about £50 million. These three items alone amount to about one quarter of the proposed increase in flat-rate contributions. For this reason I tabled an Amendment—which, unfortunately, has not been selected—designed to reduce the contributions by 1s. per head.
Other aspects of the Actuary's Report worry me. For example, we are told, on the basis of the estimates, that the trend towards increasing sickness has continued and that an allowance has been made for an addition of 3 per cent. This may be mathematically true, but the assumption should not go by default. We should take ourselves by the scruff of the neck and question the acceptability of a continuing 3 per cent. rise in sickness. What is making us more sickly? Can we tackle the causes, or is this estimate just an over-insurance about the future ill-health of the nation?
The Actuary then goes on to assume that the trend towards earlier retirement will continue. I was interested to hear the remarks of my right hon. Friend the Member for Sowerby about this because it is an element in the calculations which should not be accepted as immutable and Holy Writ. It should be challenged and questioned.
There is then the extraordinary assumption that while the mortality rate of pensioners has been lower in recent years than had been estimated, this feature is assumed to be only a temporary one. This can only mean that the mortality rate of pensioners is likely to increase in future. I would regret that very much, although I appreciate, from the actuarial point of view, that if pensioners do not live as long and therefore do not

draw their pensions for as long less money will be taken out of the Fund.
The whole basis on which we are asking men and women workers in Britain to pay extra contributions is questionable, not only from the point of view of social and fiscal policy but even from the point of view of the framework of the arithmetic on which Parliament is being asked to approve this change. I would appreciate guidance from the Minister about how these mathematical calculations are arrived at. Without this guidance I will find it difficult to explain to railway and other workers in my constituency how the Government can justify this increase.

12.45 p.m.

Mr. R. B. Cant: People who have studied actuarial estimates since the period immediately after the Second World War know that they were originally based on the assumption that unemployment would be 8 per cent.—an assumption that did not turn out to be true. This yielded a magnificent National Insurance Reserve Fund balance. The money was available to finance the mechanisation of the coal mines and so on, but not to reduce National Insurance contributions or similar payments.
Having begun on that rather cynical note, I wish to make it clear that I support the Clause, although the Government are in slight disarray. We heard a magnificent speech from my right hon. Friend the Member for Sowerby (Mr. Houghton), and on my way here in the train this morning I read the pamphlet which he wrote. However, he has left the Government service. I understand that a Minister has been appointed at Cabinet rank with overall responsibility for the future of social security. I noticed that Minister pop into the Chamber for 15 minutes or so during the Second Reading debate, but then he vanished. I only hope that our long-term thinking about this problem has not also vanished.
My main reason for supporting the Clause—and I promise to be brief; indeed, I have been instructed to be brief [Laughter.]—and particularly the flat-rate contributions and benefits is because it is designed to be a temporary measure. As a temporary provision, it has been suggested that the graduated contributions should be increased. Perhaps this makes


sense, but it would be difficult for the Government, having attached to graduated pensions something of a stigma, then to use this as a basis even for an interim reform.
We as a Government or as politicians, when governing this country, sometimes bewilder the people with the rate of change in our regulations, institutions and so on. At any rate, we pass legislation which suggests that we want to make a number of rapid changes on a number of fronts all at the same time. I suspect that the electors find this bewildering. They prefer the great sheet anchors of democracy and I regard the flat-rate contribution and benefit as being among those essential principles. These great sheet anchors have been described as regressive, but the people understand them. As for the assertions that are made about the actuarial basis of the National Insurance Fund, everybody knows that this is a nonsense. We would have to look very hard indeed to discover the people who have paid contributions which would finance the benefits payable during the normal expectation of life. Even so, the electorate have great faith in this and attach great importance to it, and we will change it only at our cost, because the Fund is based on another principle that has not yet been mentioned, and that is the contractual principle.
The average contributor pays into the Fund in the honest expectation that at the end of his period of work he will receive an amount of money as of right. In a sense, he believes that some sort of legal contract exists which does not exist in the case of some items that are budgetary and do not come within the Fund—family allowances, for example. We would throw over that principle at our peril. Many things can be said against it—that it is regressive, and so forth—

Mr. Higgins: How can one call something a contractual principle when a relationship between what one pays in and what one pays out is totally unknown?

Mr. Cant: The same criticism applies to the actuarial principle.

Mr. Higgins: With respect, not at all. We know that we put it in and then get paid out on the basis of ac-

tuarial expectations which can be statistically verified.

Mr. Cant: Only in the narrow sense. There are very few young people who have paid in sufficient contributions to finance their expectations of the retirement pension. People regard these principles as being important, and we would be doing a great disservice if we threw them over.
If we are to increase benefits we must increase taxes. It is interesting to note that the only taxes where we pay a lower percentage as a proportion of the gross national product than, for example, the Common Market countries, are our social security taxes. Those are the only taxes we can increase without getting ourselves out of line with any particular Common Market country. To some of us that is significant, and the Government must take it into account.
The other aspect of the tax problem is reflation and the precise effect of the levying of tax. I am convinced that if we are to alter our taxes at the moment we must, to some extent, make them reflationary. Although no one has worked out what happens in this context in terms of how much is spent, how much is taxed and how much is saved, I suspect that it will have a gently reflationary influence later.

Miss Herbison: We have had a first-rate Second Reading debate. We have roamed not only over matters affecting the Bill but over the whole economic position of the nation, prices and incomes, and so on. I do not take great objection to that, because they may be bound up very closely with the provisions of the Bill, but I do not intend to cover all the subjects that have been raised. Some of them I dealt with fairly fully on Second Reading. I do, however, want to take up one or two of the points made by my right hon. Friend the Member for Sowerby (Mr. Houghton) in his most interesting speech.
I was rather surprised to hear him so vehemently support the idea of some outside body. He must know the amount of work that has been done. There have been many discussions, and before the scheme ever gets to the Statute Book we intend to publish a White Paper which,


I hope, will result in the kind of discussion, not only inside this House but outside it, that will prove of great value for whatever scheme the Government decide to adopt.
Another question is the retirement age. I paid a very short visit to Sweden to look at the scheme there, and found that the retirement age for both men and women is 67. One wonders whether that would be tolerated here. Are we moving, as I think many people would want us to move, towards the same retiring age for men and for women? Are married women to opt out, or are they to be in the insurance scheme when they are working? We are giving the most serious thought to all such matters in the review we are at present carrying out.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) is, like myself and everyone else, worried about the poll tax, particularly as it affects the low wage earner. It has been suggested that, perhaps as an interim scheme, we might bring in another scheme of graduated contributions for flat-rate benefits. I must tell my hon. Friend, from my almost three years' experience of this Department dealing with a highly complex and highly technical matter like this, that if I were to have landed on my plate on top of it all some other scheme that would have to be worked out, heaven only knows when we would finally get the new scheme. We have the present graduated scheme which gives a little return but, as my hon. Friend will agree, it is almost a graduated scheme for flat-rate benefits. It has been interesting to hear his point of view on the matter, and I hope to hear other views.
My hon. Friends the Members for Plymouth, Sutton (Dr. David Owen) and for Holborn and St. Pancras, South (Mrs. Lena Jeger) have certainly done their homework on the Actuary's Report, and I shall not go into details. I merely say that the Actuary this time has, as the Actuaries on all previous occasions have, had to make certain assumptions. One of them, that unemployment is 2 per cent. he has to get from the Government. I do not think that any body is better placed than the Government to get the figure below 2 per cent., which is what I want and what the Government want.
I was asked what was being done about the 3 per cent. increase in sickness benefit experience, but that is not a question for me. Were I to do all the things that it is suggested I should do, I do not know when we in the Department would ever finish any job. But between the last Report of the Actuary and this one we find an increase in claims for sickness benefit over and above what the Actuary had expected for 1965. One cannot take a risk—if the trend continues one has to provide for it.

Mrs. Jeger: I realise the limits of my right hon. Friends responsibilities, but is any consultation going on with her right hon. Friend the Minister of Health or other Ministers about the acceptability of this continuing increase in sickness?

1.0 p.m.

Miss Herbison: As my hon. Friend will know, there is constant discussion about these matters among the Departments. We discuss them with the Ministry of Health, for instance. Inside my Ministry we have certain disciplines, some of them involving inter-Departmental consultation.
My right hon. Friend the Member for Sowerby spoke about providing some worth-while inducements to people to make them stay in work. I did not expect him to be able to say what that inducement should be. In these matters the Government Actuary has to take into account what is happening under the present schemes and what is likely to be the number retiring by the time we ask for another report from him.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) stressed the importance of the fact that our insurance scheme was a "pay-as-you-go" scheme. This is something which I stressed on Second Reading. This is not the kind of scheme to be found in private insurance. I shall not repeat again what I said on Second Reading, but there was a great deal in what my hon. Friend had to say.
The Government are as well aware as anyone that this flat rate contribution is a very great burden and in our new scheme we are giving great consideration to how we can deal with it.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2.—(AMENDMENTS OF INDUSTRIAL INJURIES ACT AS TO CONTRIBUTIONS, BENEFIT AND INSURABLE EMPLOYMENTS.)

Mr. Pardoe: I beg to move Amendment No. 4, in page 2, line 18, to leave out from 'substituted' to the end of line 19 and to insert:
'benefits at the rate of two-thirds of previous earnings, subject to a maximum of two-thirds of twice the average earnings of an adult man in industry'.

The Temporary Chairman (Sir Ronald Russell): With this I think that it will be convenient to take Amendments Nos. 15, 16 and 20:

In Schedule 2, page 11, leave out line 10 and insert:


4. Widow's allowance
half the late husband's wage or salary, subject to a minimum of one-third of the average earnings of an adult man in industry, and a maximum of earnings of an adult man in industry.
—
—
—
—

In line 11, leave out from beginning to end of line 12 and insert:


5. Widowed mother's allowance
half the late husband's wage or salary, subject to a minimum of one-third of the average earnings of an adult man in industry, and a maximum of earnings of an adult man in industry.
—
—
—
—

In line 16, leave out from beginning to end of line 21 and insert:


(a) for a married couple
one-third, rising by seven equal annual increases to one-half, of the average earnings of an adult man in industry.
—
—
—
—


(b) for a single person
one-fifth, rising by seven equal annual increases to one-half, of the average earnings of an adult man in industry.
—
—
—
—

Mr. Pardoe: This group of Amendments introduces into some sections of

our National Insurance system an entirely new principle for this country. It is a principle which in a sense sets my party apart from the other two.
On Second Reading, I criticised the Government for failing to set the target which they believed in and which I wanted them to believe in. I criticised them for making proposals which, while admittedly interim, were totally inadequate. What I have done in these Amendments is to set out the targets as they should be. They are not related in any sense to a specific figure, because to have a specific figure is to fall into the trap into which Lord Beveridge realised that he had fallen when before his death he admitted that his scheme had been overtaken by inflation, which is what has happened to our social security schemes.
Amendment No. 4 deals with unemployment and sickness benefits. It says that instead of trying to produce a whole range of benefits which I find extremely complicated and difficult to wade through, the benefits which any man can expect if he is made unemployed or becomes sick should be at least two-thirds of his previous earnings. What we are discussing is not an insurance scheme but an income maintenance scheme. What we have to decide, therefore, is what penalty society requires a man and his family to shoulder when he becomes unemployed or sick through no fault of his own. The benefits which are listed in the Schedule are entirely inadequate to that task of income maintenance, and so we propose that there should be this factor of two-thirds of previous earnings.
Obviously, a scheme of this sort has to be subjected to a maximum and the maximum, which I have suggested is two-thirds of twice the average earnings of an adult man in industry. I have chosen that because, roughly speaking, it is the division in industry between junior management and the upper echelons and it gives a figure on present average earnings of about £2,100. We are saying that no man should get more benefits than two-thirds of that figure, that is to say, no more than £1,400. It has to be remembered that that would be in addition to the child and dependent relative allowance which we also want.
This should be a permanent benefit. It is entirely wrong that such a benefit should cease after so many weeks. I have never yet been able to discover why that should happen, other than for actuarial reasons, but from my constituency experience I know that it is grossly unfair in operation. It is wrong that, after a man has been unemployed or sick and away from work through no fault of his own as a result, after a certain period he should find himself forced down to lower benefits. I wanted to make an Amendment to Clause 1 which would have deleted Section 21 of the National Insurance Act which relates to exhaustion of and requalification for benefits, because I believe that to be wrong. Not many people are involved and it would not be hideously expensive to make this concession.
Thirdly, there should be basically no distinction between industrial injury and long-term disability benefits. At present there are fairly important distinctions, with which I do not now have time to deal.
The remaining Amendments are to Schedule 2. Here, again, we need to simplify matters, and these Amendments would make it obvious to anybody exactly what he was to get as benefit if he was overtaken by disaster. For instance, I want to know what my wife would get out of the State scheme if I should die. I find it extremely difficult to discover from wading through the various Schedules exactly what the State would give her. I am one of those people—I imagine that most hon. Members are—who are worth far more to their wives dead than alive, but that is entirely because of occupational and private schemes. It is largely to clear up the uncertainty about widows' benefits that I have moved this Amendment.
Amendment No. 15 deals with widows' allowances for the first 26 weeks of widowhood and concerns widows with or without children. We have said that a widow should get at least half her husband's previous earnings and should not be expected to fall below that level for a period of 26 weeks after his death. As a minimum, we have stipulated that the amount should be one-third of the average earnings of a man in industry, which at present would give her about £7 a week. Again, there would have

to be a maximum and, related to the figure of £2,100 which I mentioned earlier, as she would get half that, the maximum would be £1,050.
The next Amendment deals with widowed mother's allowance. It has to take account of the fact that we would pay her the increased child allowances which we hope will materialise, although I do not suppose that the Government will introduce the increases that I want. Again it is the same definition which I outlined in Amendment 15, and is related to the average earnings of an adult man in industry.
Amendment 20 produces an entirely new definition of what a retirement pension should be. We have kept this principle going throughout. It should be related not to any specific figure decided upon now, but, in order to overcome the problems of inflation and of old persons who do not always share in the increased affluence of the community in which we live, it is to be related to the earnings of an adult man in industry. In this way we shall have solved many of our pension problems.
We have taken as a starting point for a married couple the present level. That is why I have said one-third of the average earnings of an adult man in industry. The present retirement pension which the Government propose for a married couple is about one-third of the average earnings of an adult man in industry and we have said that over a period of seven years it should rise to what we regard is the ideal figure of one-half. In other words the pension for a married couple should be half the average earnings of the adult man in industry, which at present is between £10 and £11 a week.
For single persons, we have again taken the present standard to start with, one-fifth, and we want that to rise to one-third. It is important to point out that we are not asking for any of these increases immediately. It would be foolish for anyone to come to this House and to ask at once for the kind of increases in contributions and taxations which these would inevitably involve. We would like to see all of these things introduced over a period of seven to eight years.
I have tried to answer the criticism which I have directed to the Government, that they have not stated what are their


ideal targets. In any social security scheme we should start from a definition of what we think is an ideal scheme and try to discover whether we can afford to pay for it and how best we can do this. If we find it is totally impossible, we may have to think again. I do not believe that the cost is impossible.
Taken together, with other things, these four Amendments would involve an increase of about 9 per cent. of personal incomes being devoted to social security purposes. In other words, I am asking the average man for 9 per cent. more of his personal income to be devoted to these very beneficial causes. That is not something from which he would immediately shy away, unless he were asked to pay at once. He is not being asked to do this. If we get the kind of rate of economic growth that we would like we would get an increase of about 30 per cent. in eight years.
We are asking him to pay 9 per cent. out of that increase. Even if we only get an increase in our rate of economic growth of about 3 per cent. a year, these proposals are still feasible. What I hope that the Government will do, rather than tear them down and say that they are impractical and impossible and too expensive, is to say whether they accept these as being the ideal standards for the benefits with which they deal.

1.15 p.m.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin): The first Amendment of the hon. Gentleman the Member for Cornwall, North (Mr. Pardoe) which he said related to sickness and unemployment benefits does not do so in practice. If he will look at the Amendment he will see that it relates solely to the Industrial Injuries Act. He says that it introduces a completely new principle into the Industrial Injuries Act, but it does not do so.
What it means is that we revert to the old principle of the Workmen's Compensation Act which was related totally to a man's average earnings. At present we have a system in which the main industrial injuries benefit is the disablement benefit. At the same time we have the maintenance benefit, in the same way as

we have maintenance and sickness benefit in other matters.
If the principle, as distinct from the wording of the Amendment was accepted, and that was the plea of the hon. Gentleman in his closing remarks, it would be a complete change in our approach to compensation for industrial accidents. At present this is based upon a loss of faculty. A great number of people suffer accidents in industry and, while there is no loss of earnings, they have a loss of faculty, in consequence of which they are able to get additional benefit under the disablement provisions of the Act.
One would have a situation, under the principle enunciated by the hon. Gentleman, whereby people affected by an accident in industry to a very substantial extent, would, during the period that they were off work, receive a percentage of their earnings, but on returning to work may well earn precisely the same amount of money as they were earning before the accident.
Let me illustrate this. A young lady, in the normal course of industrial work, has met with an accident in which she receives substantial scarring of the face. It is not an extreme illustration because it does happen. Under the provisions of the hon. Gentleman's principle, she would receive industrial benefit during the time that she was unemployed in consequence of the accident, on the basis of a percentage of her earnings. She would still have the loss of faculty, and scarring on the face, for a young lady, is a pretty substantial loss of faculty. For this she would receive no further compensation, and would be a substantial loser. I appreciate that the hon. Gentleman's intentions are sound but his examination of the problem is very limited.
I speak as one with considerable experience in dealing with industrial accidents before I came into this House. Take another example, of a clerk who loses his left hand, or the fingers of that hand. During the time that he was away from work he would receive a percentage of earnings. It may be that he was right-handed, and could go back to his work, but he would still have a loss of faculty, for which he would get no compensation, unless he had other grounds, such as a Common Law damage claim, which does not always apply because


there has to be negligence proven, of either omission or commission on the part of his employer. When this clerk returned to work, although he had lost his hand, or his fingers, it would mean that he received no disablement benefit of any kind. He would simply have had the earnings-related benefit for the period during which he was not able to work.
Under the Amendment, a person would be allowed to receive 66⅔ of his pre-accident earnings during the period he was unable to work as a result of the accident. I do not think that I need quote cases, but in practice a person can get in excess of 85 per cent. of his earnings. The hon. Gentleman's intention might be good, but the Amendment is ill conceived and badly thought out. I therefore hope that he will withdraw it.
The other three Amendments and the case deployed by the hon. Gentleman clearly demonstrate the degree of difficulty inherent in a re-examination of the kind of benefits to which the Amendments refer. We considered carefully what the effects of the Amendment would be. Perhaps I will be able to show the hon. Gentleman that the effects would be very anomalous. Amendment No. 15 relates to the widow's allowance. Its effect would vary tremendously, but the most important thing is that, because the effect would vary according to the husband's earnings, it would give an unfair advantage to the childless widow whose husband's earnings were reasonably high before his death and would worsen the position of widows with children whose husband's earnings were not very high.
Take the case of a man earning £9 a week whose widow has no children. Under the Bill, the flat rate benefit would he £6 7s. a week. Under the Amendment, the benefit would be £6 16s.—the minimum of one-third of average earnings on the current figure of £20 6s. Then take the case of a man earning £9 a week whose widow has three children. Under the Bill, the flat rate benefit would be £11 16s. 6d. plus family allowances. Under the Amendment it would be £6 16s. plus family allowances.
I am not saying that the hon. Gentleman's intentions are wrong, but the Amendments would not have the effect which he desires.

Mr. Pardoe: The difficulty is that when one tables Amendments one deals with the whole policy. I accept that the hon. Gentleman's mathematics, using the present family allowances, are entirely right. There are later Amendments in my name dealing with the family allowance situation. One cannot possibly take widows' allowances within the context of family allowances. That is why the hon. Gentleman's mathematics are not the same as mine.

Mr. Loughlin: That may be so. But we are dealing with a series of Amendments which have the same effect. Hypothetical matters later cannot be the concern of the Committee at the moment. I am dealing with the effects of the Amendment. Precisely the same sort of anomalies and difficulties arise from the other two Amendments.
The problem is that we are trying to deal with a very complicated situation in which there is a tremendous number of variants in the circumstances of the recipients of the benefits. I cannot promise the hon. Gentleman anything. All that I can say is that the Amendments would not have the effect which he intends them to have. This is an indication of how difficult it is to deal with the complicated question of paying benefits which are equitable to everybody.
I assure the hon. Gentleman that the principles enshrined in his Amendments as they relate to widows will be carefully examined in the review which we are undertaking. I must, however, make it clear that, for the Industrial Injuries Scheme, I am not moving from the principle of loss of faculty. I can only ask the hon. Gentleman to be a little more patient. I hope that, in view of this explanation, he will withdraw the Amendment.

Mr. Pardoe: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Maurice Macmillan: I beg to move Amendment No. 5, in page 2, line 19, at the end to insert:
'with the addition that these provisions shall apply to any person suffering from a substantial handicap, as a result of loss of physical or mental faculty, who is not able to qualify for any benefit under either the National Insurance (Industrial Injuries) Act;'.

The Temporary Chairman: It would be convenient to take at the same time Amendment No. 27, in line 19, at end insert:
'with the addition that these provisions shall apply to any person suffering from a substantial handicap, as a result of loss of physical or mental faculty, who is not able to qualify for any benefit under either the National Insurance (Industrial Injuries) Act or the National Insurance Acts;'.

Mr. Macmillan: I must apologise to the Committee for some confusion arising from the wording of the Amendments. There are two Amendments virtually the same. One is more or less correctly worded and one is wrongly worded. We are discussing the wrongly worded one and taking the correctly worded one with it. There was a slip of the pen, and I hope that it has caused no inconvenience.
Even the correct form of words is not—and I admit this freely—adequate to achieve the result which I should like to achieve. The nature of Clause 2 and the fact that it deals with matters relating to other Acts make it difficult to frame Amendments without being extremely detailed and perhaps delaying the Committee unduly with a lot of consequential Amendments.
1.30 p.m.
The object of this Amendment is to obtain for the disabled, regardless of the cause of the disability, allowances which are strictly and exactly comparable with those which they obtain under the Industrial Injuries Act. I quite appreciate that this needs a further Amendment to bring in those who get something because, as worded, it deals only with those who get nothing under either of the two Acts concerned. I propose this afternoon to apply a twofold argument, first on the subject of the allocation of our admittedly scarce resources to the social and other priorities given to the disabled, and secondly, on the general principles on which the so-called civil disabled should be treated, that is to say, people whose disability results from natural causes rather than from either war or accident.
On the question of the allocation of resources, I think the entire Committee would be very sympathetic to the right hon. Lady. I know she has great difficulties, as any Minister in her position has, in getting the money she would like

for the purposes she wishes to achieve. In all conditions the spending Ministers have a considerable argument with those whose function it is to achieve economy. One of the difficulties with which we all have to contend is that the National Plan—which itself almost qualifies for a death grant—assumes a rate of growth for the six years up to 1970 which would match the 25 per cent. increase in real wealth achieved in 1959–64. It is unlikely that this will be attained.
This has made the problem of allocation of resources to priorities within that allocation more acute than otherwise it would have been, since the resources must depend to a greater extent than we all hoped on taxation and contributions rather than on national growth. Those figures in the National Plan would produce something like an extra £378 million of social security spending by 1970 and a great deal of it would be pre-empted by the wage-related benefit, by the costs and expenditure of the Ministry of Social Security, and the new measures contained in this Bill and would have to be available for the half-pay pension scheme when it comes forward.
On the matter of resources, I ask where and how the right hon. Lady can manage to move the disabled from the bottom of the queue where they appear to be at the moment and how we can hope to see the future pattern of resources for social spending developing to include the needs of those disabled through reasons other than industrial injury or war. I admit that the sort of proposals I should like to see for increasing the long-term sickness benefit up to the Industrial Injuries benefit level and the provision of benefit for those who do not get those benefits at all, would cost money and we should, have to find that money. I am very conscious that what I am asking for would require more spending.
What I ask in turn of the right hon. Lady is what consideration the Government are giving to shifting the emphasis in social benefit spending on behalf of the disabled in general terms, and specifically whether she has considered any of the sort of adjustments to the short-term sick benefit suggested by various sources from time to time. I quote two of them. There was the suggestion put


forward in the Economist on 24th June that the short-term sick benefit should be as it were, taken out of the National Insurance system and that employers should pay in full for the first few weeks of sickness in salary or wages. Many of them pay the present benefit to the level of full salary or wages.
That was one consideration put forward for easing the burden on the taxpayer of the short-term sick and enabling a redistribution to the long-term sick and the disabled. Another suggestion was that of allowing firms with sick-pay schemes to contract out of the graduated pension scheme where their schemes are as good or better. That was envisaged in an Amendment which was put forward from this side of the Committee to the 1966 National Insurance Bill.
Finally, on the whole question of the allocation of resources I suggest an argument which might appeal to the Scrooges of the Treasury. The selective use of money resources might well make savings possible in the use of real resources by keeping people out of institutions when they can manage on their own in their homes with a considerable degree of help but find it too difficult to do so and are therefore eventually forced into a hospital or an institution.
I do not make too much of this argument because it is highly unlikely that it would lead to a reduction in the existing number of people receiving care since once people cease to care for themselves it is difficult for them to leave an institution and go back to ordinary life. But, if we could find a method of increasing the income of the disabled, it would help at least some of them who would not then call on the community for full care and attention.
The second part of my argument deals with the principles on which those who have the misfortune to be disabled should be treated under the Welfare State and the social security system. I know that the right hon. Lady agrees at least on one thing, that the more we can help the disabled to lead as normal a life as possible in their own homes the more effectively will our money be spent. The more we can enable the disabled themselves to contribute to society from their own work, the better it is not only for us but for them as well. One of the

surest tests of civilisation is the extent to which we can manage to bring in the elderly and disabled to the true life of the community rather than tucking them away out of sight and merely looking after them.
There are two anomalies arising from acceptance of that principle at present. One is the difference in treatment between the long-term sick and disabled and those industrially or war disabled. I shall not discuss that at length because it has been much discussed on previous occasions. The second anomaly concerns the housewife, crippled early in life, who does not get anything at all because she has never been in a position to take part in a contributory scheme. The Amendment does not affect the first anomaly, but clearly it should affect the second.
I do not want to press this Amendment to a Division because I fully accept that to achieve the purpose I have in mind much more careful discussion of the detail of the Bill is required with a new approach to the whole problem which we understand the right hon. Lady is giving to it. I hope that we can get some assurance from her, first, that she accepts as a matter of principle that the anomaly between the long-term sick and disabled and the industrially disabled should be ended so that all are treated alike regardless of the causes of disability and, secondly, that these benefits should be extended to those whose disability has prevented them from ever becoming contributors. This would mean that in future measures should be framed to include housewives and those disabled after marriage as well as young people who are disabled early in life.
Thirdly, I hope that the right hon. Lady will accept that in all these cases payment must be made not only up to the present level of Industrial Injuries benefit, but that there is also a strong case for making direct payments or helping through tax allowances on a much higher level designed to cover the extra cost of disabled people leading a normal life. I think that this is probably the most important aspect.
Therefore, what I most regret of what is left out of the Bill is the concept of a positive effort by society not to allow accident or disability or misfortune of


that kind to exclude some of its members from full participation—the exclusion of a method which would enable them themselves to contribute.
I think that perhaps one of the saddest things about today's debate is that lack which the right hon. Gentleman the Member for Sowerby (Mr. Houghton) touched on earlier, the imaginative approach to the problems of National Insurance and social security, and the persistence of the generally rather conventional thinking which we all still seem to have, and which it is so difficult to breach. I hope that we shall be able this afternoon to see signs in the right hon. Lady that she and her colleagues are aware of this problem, and that she understands that, if she is hoping for support from this side of the Committee, this is a type of selectivity, which I am fairly certain she would not disapprove of herself, which we must expect to see from her, if not this afternoon at least on some future occasion.

Mr. James Griffiths: The hon. Gentleman the Member for Farnham (Mr. Maurice Macmillan) has raised a number of fundamental questions about the future of our social security schemes. As the Amendment stands, it seems to me that it would bring within the cover of the Bill disability caused through certain miners' diseases. That is a very deep question indeed. The Industrial Injuries Act was in itself a radical departure from the way we compensated people for injury arising at work. The hon. Gentleman would have to take into account the change in 1946 and in 1948 when the Act came into operation. Prior to that the responsibility for providing compensation for a man or woman disabled in industry rested entirely on the employer and the insurance companies.
We transformed that, by what, I think, was complete agreement in the House, to a social service to which employers and workers and the State made contributions. We have to remember that that was a very important matter, since it was the first occasion on which workmen were being asked—indeed, compelled—by Act of Parliament to make contributions for compensation for injuries they suffered in the service of their employers. Unless opinion has changed very radi-

cally, 1 would say to the hon. Gentleman that the prevailing view in industry would be that the Industrial Injuries Act must stand on its own to cover injuries received within industry.
I agree with him that this raises the whole question of what to do about people disabled and not able to attribute their disability to their industry. Under the Act itself there are two kinds of anomalies. We have removed one part of one of them in this Parliament, and we are grateful for that. One of the most difficult things of all is to meet two men—and this is an experience I very often have—one of whom is certified to be disabled from pneumoconiosis, while the other who has exactly the same kind of symptoms, which I believe arise from the same cause, is outside the provisions of the Act. This question of making provision for those who are disabled outside their employment does raise very deep problems indeed.
1.45 p.m.
The hon. Gentleman has asked the Minister to look at it, and I hope that it will be looked at in a general review. Meantime, I would add to what my hon. Friend the Member for Bedwellty (Mr. Finch) said the other day. He knows that when I was Minister one of the things that I was most anxious about was to see that the Industrial Injuries scheme was, in a sense, patterned on the scheme adopted for war pensions, which included special benefits, and that that scheme should have application in the industrial field. I would hope that we should be able to introduce those benefits into the long-term sickness benefits.
The people who have had the least out of the improvements we have made under the scheme are the long-term sick. I would hope, therefore, that my right hon. Friend and the Government would give very serious consideration, when they come to their general review, to a review of the whole of these schemes, and the application of sickness benefit to the long-term sick, and that some of the special benefits provided under the Industrial Injuries scheme, such as constant attendance allowance and unemployability allowance, may be applied for the long-term sick. We ought to make provision for the long-term sick as we do for those who are provided for under the


Industrial Injuries Act or under the warrants for war pensions. That would go some way to meet the problem which the hon. Gentleman has raised.
For the rest, I think that if we are to make provision for those who are disabled outside industry—and I appreciate that this indeed becomes daily more urgent because of the number of accidents we have, the number of road accidents, for example, and accidents in which people are disabled for the rest of their lives—it requires much more thought than we can give it at this moment. I think the hon. Gentleman has rendered a service by raising the matter, and I hope very much that my right hon. Friend and the Government will give consideration to it. It may be some time before they can complete their consideration of it, and in the meantime I strongly support the views, put forward on Second Reading, by my hon. Friend the Member for Bedwellty, whose speech I listened to with very great interest. I hope we shall consider applying to the long-term sick the extra benefits. I think that this is something we can do while we are thinking about the major, fundamental problems raised by the hon. Gentleman.

Mr. Bernard Braine: I should like to join the right hon. Gentleman the Member for Llanelly (Mr. James Griffiths) in his plea for a review of our provisions for the industrially injured and the long-term sick. No man in this Committee speaks with greater authority than he on this subject, and few have made a greater contribution to practical work in this field. I agree with him, too, that we have here come in our consideration of the Bill to a point of very great importance.
This Amendment seeks to close one of the most glaring gaps in our present social security arrangements. Whatever else the Bill does—and, of course, I warmly support its general provisions—it does nothing for the permanently disabled; it does nothing to end the discrimination which exists between people suffering from the same degree of incapacity. We have made, thanks to the efforts on both sides of the Committee under successive Governments, generous provision for those disabled by war and by industrial injuries. We have

made less generous provision for those breadwinners who are permanently incapacitated by accident away from work, or by serious illness.
We have made no provision at all for persons born crippled, or incapacitated in some other way in body or mind, or for the wife who, as a result of accident or disease, is stricken down and becomes completely helpless in her own home. I have raised this matter before, as, indeed, many hon. Members have, and I shall not do so again today in any detail, except to say that I entirely agree with my hon. Friend the Member for Halifax—[HON. MEMBERS: "Farnham"]—my hon. Friend the Member for Farnham (Mr. Maurice Macmillan). I remember when he was the Member for Halifax and made such a deep impression on me that the name of his former constituency has stuck.
I agree with my hon. Friend when he says that giving practical help to people who are disabled to enable them to live lives as full and as creative as their disabilities will permit not only makes good social sense but good economic sense as well. Yet the fact is that it would be hard to find a more deprived group in our community than the disabled. They encounter difficulties at every turn. If they are employable, they are restricted in their job opportunities. They have difficulty in getting to work. Even the Royal Commission on Taxation recognised that disablement put upon a man and his family an extra burden which the rest of the community does not have to bear. I may say in passing that that was one reason why we sought to exempt disabled workers from the Selective Employment Tax.
If they are permanently disabled and unemployable, inevitably their families are put to a great deal of additional difficulty and discomfort. Those of us who work closely with the disabled know that disability cannot be isolated. It leads to a chain of other disabilities affecting life as a whole. It affects personality. It affects social, emotional and educational development. It imposes an enormous strain upon others in the family circle. Moreover, the disabled often endure a degree of discomfort which very often is similar to the pain and discomfort which normally fit people experience when they


are temporarily incapacitated by sickness; yet this is not recognised in any way.
There are a number of ways in which help can be brought to the permanently disabled and their families. Within the context of this Clause and the proposed Amendment, effective help could be brought if the will to do so existed. I have no doubt about the desire of the right hon. Lady and her colleagues to grasp this nettle. I suspect that the matter is being investigated very closely in the review.
The right hon. Member for Sowerby (Mr. Houghton) delighted us in all quarters of the Committee with his speech, even if it was a little wide-ranging. He brings a great humanity and experience to bear on the subject. In his pamphlet "Paying for the Social Services", he says:
There are many more casualties of the Welfare State than many of us know about. I feel particularly strongly about all forms of 'civilian' disablement (that is, all disablement due to accident or disease other than conditions covered by war and industrial disability schemes). We know very little about the nature and extent of this field of disablement. The sufferers can claim no disability pension; some of the incapacitated are on sickness benefit, and many, of course, are over pension age. Those afflicted may be housewives and widows as well as those at work. When I left the government, research was being done on this—first to find as much information as possible. We have a lot still to give to those who have lost some of the faculties we enjoy and some of the joy of living.
I am sure that none of us disagree with a word of that. However, if the Minister intends to reject my hon. Friend's Amendment, we are entitled at least to ask her to raise the veil enshrouding the review, which has been going on now for a very long time, well over two years.
There are many anomalies to which I could refer and which no doubt are the subject of examination in the review. I wish to draw attention to just one of them, because it baffles me completely, and it is one which would be removed if the Amendment were accepted.
It is quite a small point, except to the people most affected. A death grant is not payable in respect of a person over the age of 19 who has been severely mentally handicapped since childhood. The point at issue is quite a technical one which, at first sight, might not seem to be

important because it does not concern very many people. However, for the parents or near relatives of someone who has been afflicted by a substantial mental handicap from birth, it raises a very important point of principle.
As I understand it, if a substantially handicapped young man or woman with a parent living dies before the age of 19, a death grant is usually payable by virtue of the parent's insurance—

Miss Herbison: I am sorry to interrupt the hon. Gentleman, but time is going on. Unless we get this Bill, it will be impossible for us to make the payments, and it seems to me that what he is saying has nothing to do with the Amendment.

Mr. Loughlin: The Amendment was not selected.

The Deputy Chairman: Order. The first part of the right hon. Lady's remarks is not a matter for the Chair, but I am sure that the Committee will take note of what she says. On the point of order raised in the intervention by the Joint Parliamentary Secretary, the Amendment was selected and the hon. Member for Essex, South-East (Mr. Braine) is in order in replying to it. I understand that the consequence of the Amendment, if accepted, would be to give benefits, one of which is the death grant. If that is so, it puts the hon. Gentleman's remarks in order.

Mr. Braine: I have no desire to impede the progress of the Bill, and I was very careful to say that I did not intend to go over all the anomalies, apart from the question of the totally incapacitated wife for whom no provision is made. I was careful to say that I intended to select just one anomaly. I will be as brief as I can, but the Committee is entitled to know what the anomalies are and how unjust they seem to the people most closely affected. It is no less unjust because it only affects a few thousand people instead of a few million. The injustice is there, and I want to know whether this is the sort of point which is being covered by the review about which we hear so often in general terms but the details of which are still hidden from us.
I want to take the case of a widow earning a small wage and struggling to bring up a number of children, the eldest


of whom is about 20 or 21 and has been seriously mentally handicapped from birth. I have a constituent in that position. Her eldest son died. If he had died a few months earlier, his mother would have received a death grant by virtue of her own insurance. Because he was over 20 when he died, she got nothing, although there was no change in his condition. He was and always had been a helpless dependant.
I concede at once that we are faced with a number of difficulties here. It may be argued that, if we accept that these are circumstances which warrant a breach of the requirement that benefits are only paid where contribution requirements have been met, we open the way for the erosion of that principle in other—[Interruption.] I hope that I can have the attention of the Treasury Bench. I do not know whether the Joint Parliamentary Secretary wishes to intervene. If the hon. Gentleman wishes to prevent me from saying what I have to say shortly, I shall say it in greater detail. This is a point of some substance to those who are most closely concerned. If the hon. Gentleman would like me to read out the long list of anomalies which exist, and which may or may not be the subject of the review, I shall do so. I hope, therefore, that I may have the attention of the Minister.
2.0 p.m.
The right hon. Lady knows that this is an anomaly. It is a difficult one, and I have no doubt that she would wish to do something about it. In fact she has said on a number of occasions during the last two and a half years that she is considering what to do. The Parliamentary Secretary, too, has indicated on several occasions that he is going to do something about it. The sole purpose now is to ask for an assurance that matters of this kind are being dealt with in the review, and if they are, to ask when the review will be made known to the House. I recognise the difficulties, and I am not seeking to harry the Minister, but, given the earnest and sincere desire of the Government to find a solution to these problems, it is high time that a veil was lifted from the review which has been going on for so many years.
I hope that when the right hon. Lady replies she will give the Amendment

sympathetic consideration, or at least take the Committee and the country into her confidence and answer the question asked by my hon. Friend the Member for Farnham about determining the social priorities. I think that his question requires a frank answer. Social security is the business of every man and woman, social priorities touch the conscience of every man and woman, and we are therefore entitled to know a great deal more about the Government's plans than has been revealed thus far.

Miss Herbison: A number of matters have been covered in the discussion. The hon. Member for Farnham (Mr. Maurice Macmillan) made it clear that neither of the two Amendments really covers all that he wants to deal with, and I remember that when I was a back bencher I often tried to table Amendments only to find that quite often they did not cover everything that I wanted. I take what he said in that spirit and I shall deal with the matters that he really wishes to raise. What he is asking for is that we should extend the whole range of benefits provided by the Industrial Injuries scheme to all people who are disabled in any way, and for any reason. This is really what he wants to achieve.
I was interested in the point made by my right hon. Friend the Member for Llanelly (Mr. James Griffiths), who was speaking from long experience. I believe that there is a fundamental difference between a limited scheme—and it is, indeed, limited—of compensation for disablement arising from accidents at work, and what is in effect an attempt, by means of the Amendment, to compensate the individual citizen for physical or mental disablement. I think that my right hon. Friend was right in saying that in industry there would be a great deal of support for something extra for the risk which a person takes in, say, mining or heavy industry. But this does not mean that I do not think we need to do far more than we have done for other disabled people. I feel this very strongly indeed.
I would like to consider the various people who are not covered by the Industrial Injuries Acts. First, there is the chronic sick man or woman who is covered for sickness benefit. These people may be chronically sick from a very early age, and all that they have


during that time is the National Insurance sickness benefit. But if it is a man who is disabled, he can receive a payment for his wife; and supplementary benefits are also provided to help these people.
Very often a comparison is made between what a man can get if he is industrially injured, adding not only the disability benefit but all the valuable extras he can receive, and the £6 10s. which a disabled man receives for himself and his wife. But if one considers the supplementary benefits available for the long-term sick and adds to this the full rent and rates which are allowed, one sees that there is a big difference between the flat rate sickness benefit and what the chronically sick man can get.
I am not saying that that is sufficient, because very often the chronically sick man needs constant attendance. I can tell the Committee that I have been doing quite a lot of research into this to see how we can provide some form of constant attendance allowance for such people. But again the problems are very great, even in the assessment of the disability. I do not want to take a long time over this. There is such a lot that I was going to say. We have to contend with the difficulty of the shortage of medical manpower, particularly when one is considering not merely the chronic sick but the person who is not covered by our insurance schemes.
I come now to deal with the physically or mentally handicapped people who have never been able to work, people who perhaps have been born physically or mentally handicapped, or who have become so at a very young age. From the age of 16 onwards they can get a supplementary benefit in their own right, irrespective of the income of the parent or parents.
In addition to what we call the basic scale of supplementary benefit, National Assistance as it was, a person who has been in receipt of it for more than two years receives a special long-term addition of 9s. a week. On top of this, further special additions can be made for the cost of laundry—and this is sometimes very important in such a home—the cost of a special diet, additional fuel costs, the cost of domestic help, and so

on. All these special additions can be granted by the Supplementary Benefits Commission, both to the person who has no insurance rights, and to the person who is chronically sick and is receiving National Insurance benefit. I think that in this respect, particularly since supplementary benefits were introduced, we have made considerable improvements. In other words, while we have been examining these problems in more detail we have tried to ease the burden wherever we could.
I come now to what I consider to be one of the most difficult problems that of the disabled housewife whose husband is in work. The disabled housewife, because she is not insured, receives no no benefit in her own right. And because her husband is in work, and because she is considered to be his responsibility, she can get nothing from the supplementary benefits scheme. This is one of the most serious difficulties encountered in making provision for the disabled.
I realise only too well that financial hardship can be caused when a disabled person is at home—whether that person be a child or adult. Great distress and great strain can be caused, and anything that can be done to relieve this is worthwhile doing.
I now want to answer one or two points raised by the hon. Member for Farnham. He asked if I had been considering suggestions made in various articles. One was that short-term sickness should be taken out of the sphere of insurance benefit and paid for by the employer. Some employers pay full wages for a certain time when a man is sick. Sometimes they merely deduct the amount of the insurance benefit which the man gets. I have been considering this proposal, but it is not as simple as it looks. We must remember the difficulty that might occur with the vast number of smaller employers, even if they paid less than the full wage to an employee who was off sick and at the same time had to employ someone else.
The hon. Member will be aware that in 1969 unemployment benefit will cease to be paid for those on short-time work. This is to become the responsibility of the employer. I have been considering all the suggestions that have been made.
This has been a good debate. The hon. Member for Farnham and others who


took part in put forward their arguments in a reasonable way. They tried to be helpful in giving their ideas—and I want all the ideas I can get.
We still have a lot to do. We have been discussing one of the most important questions. It is of the greatest importance to bring help and happiness to these people. I realise that although a lot of welfare work is done in this sphere a lot more could be done. Nevertheless, for the reasons which I have given, I hope that the hon. Member will feel able to ask leave to withdraw the Amendment.

Mr. Maurice Macmillan: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 3.—(AMENDMENTS AS TO BENEFIT UNDER OLD CASES ACT.)

Question proposed, That the Clause stand part of the Bill.

Mrs. Joyce Butler: I do not want to detain the Committee for more than a few moments. Some time ago I referred at Question Time to the problems of industrial workers who contracted bladder cancer 20 or more years after industrial exposure. I thank my right hon. Friend for having made provision in the Clause for the extension of industrial injuries benefit to persons of this type who suffer from certain slowly developing neoplasms due to their employment before 5th July, 1948, but which manifested themselves only much later.
The Committee will know that cancer of the bladder arising from exposure to certain chemicals used in the rubber industry, and more recently tumours arising from exposure to asbestos in the asbestos industry, have been brought within the Industrial Injuries Regulations, but some workers have not been eligible for benefit because the period of exposure which doctors consider significant occurred before the operative date. The average time from first exposure to the development of the disease, in the case of bladder cancer, is 18 years, and it can be 30 years, or more—and similarly with asbestos disease.
There have been some tragic cases. In recent months inquests have been carried out on two such workers—one a man of 47 who died from asbestosis because

he had worked in the asbestos industry 26 years before, and the other a man of 56, who had worked in the rubber industry 20 years before contracting the disease. The Clause will not apply retrospectively to the dependants of these workers, but it will mean that in future people in these tragic circumstances will not have financial difficulties added to the already serious burden of the disease from which they suffer.
I hope that the Clause will also apply—as I think it will—to bone necrosis following work in compressed air, and other forms of tumour associated with working environment.
I am very grateful for this Clause. I do not want to get involved in arguments about coroners, but I commend the coroners who have drawn attention to this anomaly. I am also grateful for the devoted efforts of doctors and research workers who have brought this to the attention of my right hon. Friend's Department. I want to refer particularly to Dr. Case of the Chester Beatty Research Institute, for his work in this field, but I can assure the Committee that although the Clause is entitled
Amendments as to benefit under Old Cases Act.
there is no direct connection between the Old Cases Act and Dr. Case!
We have heard much from hon. Members and the Minister about the things that she has not been able to do, but I thank her for what she has done in this case.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 4 ordered to stand part of the Bill.

Clause 5.—(TEMPORARY POWER TO INCREASE FAMILY ALLOWANCES BY ORDER.)

2.15 p.m.

Mrs. Lenà Jeger: I beg to move Amendment No. 10, in page 4, line 34, at the end to insert:
Provided that any such increase shall not be subject to any condition as to the income of the family.
The Clause enables the Government to increase family allowances at a subsequent date. Hon. Members on both


sides of the Committee have asked the Government to give them some details of the proposals. We have heard from my right hon. Friend that we shall get this information before the House rises for the Summer Recess. My right hon. Friend is to be congratulated on the amount of work that she has put into this aspect of the case, and especially the careful research, the results of which were published only a few days ago.
I put down the Amendment because I thought it important that the Committee should have an opportunity of expressing its views on certain aspects of this complicated problem. I notice that in the OFFICIAL REPORT on 21st June my right hon. Friend explained that this provision, seeking power to increase family allowances, was inserted so that
if appropriate, any interim improvement in family allowances could operate from the same date as the increases in other benefits."—[OFFICIAL REPORT, 21st June, 1967; Vol. 748, c. 1741.]
I hope that the Government have decided that it is appropriate that the actual date of improved family allowances should coincide with the changes brought about by the Bill, otherwise we shall create the position in which people with larger and poorer families, of the kind with which I am mainly concerned, will be having to find 2s. extra a week when the breadwinner is at work, and when they want to claim higher benefits they will be precluded from doing so under the wage stop procedure. I hope that it can be made clear that that is not my right hon. Friend's intention.
The Amendment seeks not to introduce a new principle but to reaffirm the basic principle underlying the original payment of family allowances. When that brave woman Eleanor Rathbone campaigned year after year for family allowances, her object was to arrange a family allowance unconnected with income and not contributory. The arguments in the House in discussion of the Act, as now, were that much money would be wasted by giving these allowances to people who did not need them, but the House and Lord Beveridge, in his Report, took the view that this was a separate, special benefit which should be paid as of right in respect of the children in a family

It was generally accepted that where money was less essential to a family, the benefit should be recouped through Income Tax, because the family allowances are taxable. I am withstanding the temptation to discuss the rearrangements of family allowances in relation to Income Tax on children's allowances which would be out of order. The Amendment crystallises the far wider debate on selectivity and universalism—fashionable words but dangerous over-simplifications, which should not be allowed to divert us from the real needs.
The most challenging problem in this post-Beveridge era is to find the balance between personal spending and community spending and the right level between the social wage and the individual money income. Whatever the outcome of the wider debate, the Amendment would ensure only that the principles which actuated the origin of the Scheme were preserved and maintained. It should be made clear that there must be no income test. I do not think that the Committee would want to discriminate between one family and another—

The Deputy Chairman (Mr. Sydney Irving): Order. I think that the hon. Lady has nevertheless been unable to resist temptation.

Mrs. Jeger: I apologise, Mr. Irving. My Amendment refers to family incomes, but I will try to keep more closely to it.
Because of the change in purchasing power, this benefit is now a smaller proportion of the average family income than when it was introduced. For a man with average earnings and four children, the original 5s. represented 12 per cent. of his weekly income. Today, family allowances represent less than 8 per cent.—

Mr. James Griffiths: Does my hon. Friend realise that the Beveridge proposals, which we accepted—it fell to me to put the Act into operation—was family allowances of 5s. a week in cash and services in kind equal to 3s. a week? Thus, Beveridge originally proposed 8s. a week. That should be considered to appreciate the full benefit of the old Act.

Mrs. Jeger: I thank my right hon. Friend for reminding us of that.
On practical grounds, it is also unrealistic to suggest that family allowances should be linked to means. There is bound to be delay in payment, for one thing. If we tried to pick out by P.A.Y.E. or some other Inland Revenue means those families which needed bigger allowances than others, there would be considerable delay. Many wages fluctuate and it is impossible to accept the average yearly delay in tax assessment as relevant when dealing with a large number of poorer families, often with fluctuating wages.
I am appalled at the amount of bureaucracy which would be involved in inquiring into the change of income of every family before a weekly allowance was provided. I am sure that any hon. Members who support the idea of family allowances being related to any form of means test would see how completely impractical that is.
Moreover, if we limited this increase to what were regarded as the lower income families, there would be serious disincentive to work overtime and promotion. If a man received family allowances one week because his income was low but in a week in which he did a couple of hours overtime he lost the means-tested element of family allowances, there would he a great disincentive. Any such arrangement would also have a dampening effect on the wages structure.
I am sorry that my hon. Friend the Member for Bedwellty (Mr. Finch) is not here, because he and I have had many friendly arguments on this subject. I know that he is most concerned with families getting a decent minimum wage, so that the social benefits are of less drastic concern, but we agree, as do many of my friends in the trade union movement, that we must deal with the question of poverty of the families described in my hon. Friend's Report by the combination of a decent family income and realistic family allowances which will ensure that the worker with the larger family gets extra assistance.
If Clause 5 benefits are selective, I can see terrible administrative problems. I find the suggestion unacceptable philosophically, anyhow, but whenever benefits are made selective many people who are entitled to them do not get them. In the

Report on the Circumstances of Families, it was confirmed that, of children in need and entitled to free school dinners only about one in four received them. Many other children are entitled to welfare foods and free milk but do not get them.
Therefore, the only way to ensure that through this Bill and the increases which we hope will come under Clause 5 there is no selectivity, but that the Government will stick to the original concept of the family allowances is a payment to raise which will ensure that when the announcement is made about increasing family allowances, no conditions at all will be imposed on the recipients. Chancellor of the Exchequer can be the standard of living for families. The trusted to deal with any income which is within his attention. I hope that the Government will accept the Amendment,

2.30 p.m.

Dr. David Owen: I rise to support the Amendment, which also stands in my name, and I hope that the Government will accept it. My hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) has sketched to the House the main reasons for the Amendment, and I hope that she will not take it amiss if I correct one point which she made. In all our discussions about selectivity and universality, we have become so besotted with the words that I think she was in error in one statement which she may regret. Although we cannot go into them in detail, for there are many different approaches, most of the schemes which we have been seriously discussing are selective. I am therefore not opposed to selectivity in principle.
What I am objecting to in the Amendment is that the reason for payment should be subject to the person's income and that it should be a means-tested benefit. In family allowances I am strongly opposed to a means-tested benefit. But that does not mean that in some areas I am not prepared to see selectivity, and some of the methods of payment which have been suggested—which I support—by such bodies as the Child Poverty Action Group are selective. I wish that this were more clearly understood in the country. The aim is to give the major benefits to those people who at the moment do not receive large tax allowance benefits. That is all that we are asking. We are not


asking that we should penalise a large section of the community, but we are saying that we should pay as much as a 25s. increase for the first and all subsequent children to those people who at the moment receive no benefit from tax allowances. The Government have already tackled the anomaly of mortgages and they can surely carry this principle into family allowances.
May I mention the speech on Second Reading—with much of which I agreed—of my hon. Friend the Member for Bedwellty (Mr. Finch). In that debate he indicated some areas of a selective approach to benefits which we can all support. He mentioned the extension of constant attendance allowance, which my right hon. Friend the Minister has also mentioned. There are approaches to these matters which we agree can be selective. I would say to my hon. Friend the Member for Bedwellty that there is not a major division of opinion between any of us on this side of the House because I see family allowances as complementary to attaining a minimum wage structure. I come from the City of Plymouth where wages are terribly low, and I am deeply concerned to get a minimum wage. If I felt that by pushing for increased family allowances I was harming the case for a minimum wage, I should be very troubled. In fact, I think that they are complementary.
My right hon. Friend the Member for Llanelly (Mr. James Griffiths) said that he preferred the term "family endowment". I agree with this. By calling it "family endowment" we should bring it within the concept of an incomes structure—and that is how Beveridge initially saw it. His initial recommendation was that it should be administered by the Treasury, and in many respects I regret that it went to Social Security, because we find it impossible in wage negotiations always to take account of families and family size. We are involved in a strange paradox. We make allowance for family size in supplementary benefits and yet by allowing the family allowances to fall largely into disrepute because they no longer have the same purchasing value as when they were initiated, we are no longer making for the man in full-time work, adequate provision for family size. We cannot make that provision in the

wage-negotiating machinery, nor do we wish to do so. This has been recognised by many trade union leaders, and some wise leaders have come down in favour of the recommendation of the Child Poverty Action Group. It is a matter of great concern to me that so much discussion is taking place trying to get means-tested benefits. The Amendment is aimed at dealing with this difficulty.
In its article of 24th June, I confess that I thought the Economist did a great disservice to the arguments on this issue, because it was far too simpliste and suggested that everything was all too easy; there was no serious discussion and some of the major objection were not outlined. There was one point to which I would take particular objection. The Economist wrote:
It seems quite obvious what scheme humanitarians should prefer. Britain should spend that £13 million a year to give means-tested increases to the poorer families only.
There was no discussion in that article of the difficulties of this scheme. I fully understand that some would prefer this scheme, but there are powerful reasons against a means-tested scheme, not least its uptake and it is extraordinary that it should be proposed by hon. Members opposite. I do not wish to draw attention to the hon. Member for Cornwall, North (Mr. Pardoe), who is in favour of the scheme which I favour, and I will not assess the merit of the different schemes. The Opposition seem to favour a means-tested family endowment, and it comes ill from their lips that the high priests of the doctrine of incentives should be introducing something which cannot but fail to be a disincentive to the man who is in full-time work. He is the person on whom we must concentrate—the man in full-time employment.
I draw attention to the Report which has recently been published on Circumstances of Families, which owes a great deal to the inspiration of my right hon. Friend who set this research in motion. I am critical of some of the other aspects—about publicity given to it and the length of time that we have had to wait for the Report, as will be seen from the Order Paper—but it provides thoughtful ammunition for those of us who are seriously concerned about the implementation of means-tested family allowances


schemes. This comes out clearly on page 29 where it is stated:
… in families where the father was in full-time work and resources were below requirements, only a quarter of the children received free meals".
This indicates that when we are talking about the dignity of people and their natural resentment at having means-tested benefits, this is not a point about which my hon. Friends talk just because of old memories. It is because they know that that dignity still exists. My family come from the Welsh Valleys, and I know from them and from my grandfather about these things. They told me about the days of the real unemployment, and the horror of it. But we all know that there still exists that desire to stand on one's own feet and to provide for one's own family. That is why, if we move the family endowment away from the benefits which are given as of right, we shall do ourselves a great disservice.
Many other arguments can be developed, and many things come out of this Report, one of them being that over 1 million children are living in poverty in this country. When I gave a figure of over 1 million on an Adjournment debate in December, some hon. Members thought that I was exaggerating, but the figures of the Report show that it is over 1 million—and the Report did not take account of one-child families, where there is considerable poverty, too. That is why we should give the benefit to the first child.
I know that there are financial implications and that the Government face great financial difficulties. I can understand all the arguments against putting any further load on the Exchequer. I also accept that some of the schemes which I support would perhaps do that. But I urge the Government to remember that by their prices and incomes policy they have held wages very low. People in full-time work with very low wages have been deeply affected over the last few winters. By a substantial increase in family allowances we can to a great extent get round the anomalies of the wage stop, we can give a boost to the lower-paid worker and, above all, we can show once more that the Labour Party are deeply concerned about poverty. If we have to increase taxation to deal with it, I shall be prepared to go to the country and explain why.
There comes a time when love should be the basic principle of political action. We can argue too much about what may be rather unpopular with certain sections of the community. I want to see the Government acting decisively. I know that my right hon. Friend is fully aware of the implications of any decision which would involve us in means testing family endowment payments. That being so, I hope that the Government will accept the Amendment.

The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland): As we wish to make progress with the Bill, I will reply briefly.
I have listened with close attention to the remarks of my hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Lena Jeger) and my hon. Friend the Member for Plymouth, Sutton (Dr. David Owen). I appreciate their concern in this matter. They both emphasised the need to ensure that any increase in family allowances under the Clause is not subject to any sort of means test. I can assure them straight away that the Amendment is unnecessary because the Clause does not give power to my right hon. Friend to introduce conditions for the receipt of family allowances beyond those contained in the Family Allowances Act; and, as they know, that Act makes no provision for means testing. I assure the Committee that any increase under the Clause will have to be in the form of a straight addition to existing family allowances.
My hon. Friend the Member for Holborn and St. Pancras, South asked if it was our intention that any increase should coincide with the increases in other benefits under the Bill. The answer is "Yes". My right hon. Friend has said on more than one occasion that the Government have promised to announce their proposals before the Summer Recess. I assure the Committee that this will be done. With this brief assurance, I invite my hon. Friend to withdraw the Amendment.

Mrs. Lena Jeger: I thank my hon. Friend for that reply and, in view of his remarks, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Worsley: I beg to move Amendment No. 11, in page 4, line 36, to leave


out from 'shall' to the second 'of' in line 37 and to insert:
'not have effect until approved by resolutions of both Houses'.

The Temporary Chairman: I suggest that it would be convenient for the Committee to discuss at the same time Amendment No. 12, in page 5, line 1, leave out subsection (3).

Mr. Worsley: The Amendment is concerned with procedure. Certain hon. Gentlemen opposite may consider us to be high priests, but we do not intend at this point to try to debate the merits of any scheme for family poverty. The right hon. Member for Sowerby (Mr. Houghton) asked for a great debate on social policy. I wish that he would address that question to his right hon. Friends in the Government. They should indeed initiate such a debate. Instead, what have they done in this matter? Consider, first, the way in which the House of Commons has been treated over the Bill. We had three hours on Monday and then, four days later, a short Committee stage on the Floor of the House.

Mr. Pardoe: I understood that the decision to limit the debate to this ludicrously short time resulted from an agreement between the two major parties through the usual channels. If that is so, are the two major parties engaged in a conspiracy to stifle discussion on the Bill?

The Temporary Chairman: Order. That question hardly arises on this Amendment.

Mr. Worsley: Whatever may be the merits of that intervention, the fact remains that, on this key subject of family allowances and related matters, we are being totally deprived, under the procedure suggested, of a proper debate. Not only have the Government not come forward in the Bill with their promised proposal, but they propose that there should not even be a debate on an affirmative Resolution. The only way in which a debate could take place would be for the Opposition or other hon. Members to pray against the Regulations, and we know the limitations of a debate on a Prayer.
Amendment No. 11 suggests that there should be an affirmative Resolution so

that a debate may be held on a Government order. This is much less than we should like. The Government intend to initiate a new policy in this matter and it should be debated in detail by the House of Commons. But the right hon. Lady will not give us that opportunity. This is, perhaps, not her fault. The fact is that the Government, after nearly three years in office, have still not made up their minds on this issue, although it is ludicrous to think that they have announced that they intend to make up their mind this month. They owe it to Parliament, instead of leaving matters until the Session is coming to an end, to make up their mind, tell us their decision and give us a chance to debate it.
2.45 p.m.
The Amendment is not tabled in an effort to probe the subject or merely to initiate a debate. We feel it the absolute minimum that the Government should give; that is, that we should have an opportunity of debating the subject on an affirmative Resolution. We feel particularly strongly about subsection (3). The Clause begins by giving powers for a reduction of benefit in certain cases—as may appear to the Minister to be appropriate in consequence of an increase—but there is here a matter of principle of the greatest importance. Is it right that, on an order, which is not an affirmative one, the Government should be given power to decrease benefits in any case? This must be wrong in principle.
We say with a feeling of anger that the Government should make this the subject of an affirmative Resolution and that they should not treat an area of social policy of such importance in such a cavalier manner. This is another example of the technical incompetence of the Government. They owe it to Parliament, when initiating new policies of this sort, to allow hon. Members to debate such matters in detail.

Miss Herbison: I, too, will be brief, and I am grateful to the hon. Member for Chelsea (Mr. Worsley) for not speaking at length, although I appreciate the importance which he and his hon. Friends attach to the Amendment. He twitted us considerably about our not being ready to announce our plans. I repeat to him what my right hon. Friend the Chancellor of the Exchequer told the House; that the


Government are reviewing not only expenditure on social security payments, but are carrying out a thorough review of the whole sphere of public expenditure. It is only then that we shall be able to have any sense of getting our priorities right. Because of that, it will not be until nearer the Summer Recess that I shall be able to make a full announcement.
I should have liked to have been able to agree to the proposal for an affirmative Resolution, because there is much in what the hon. Gentleman has said. We here propose to adopt the negative procedure, and a very important principle is involved when we may be lowering benefits for children. I accept that, but I remind the hon. Gentleman that what we do under the Bill will not last for years. The Committee will be aware, and I stress this very strongly, that the power for which I ask under Clause 5 is purely temporary. Whatever we do under it must come to an end by April of next year, so that the period involved is only from the beginning of November to the beginning of April. If it had been otherwise, I should have felt that there was a great deal more in the hon. Gentleman's case, although I admit that, in any event, there is something in it.
I am very anxious that if part of our plan is to raise family allowances along with other benefits in October, we should be able to do it in October, but acceptance of the Amendment moved by the hon. Gentleman would leave very little chance of these payments being made before December. I am sure that no hon. Member would want to deny these poorer families this benefit in those two winter months. For the reasons I have given, I hope that the hon. Gentleman, strongly though he feels on the subject, will be willing to withdraw the Amendment.

Mr. Dean: The Minister has granted that we have a good point here, but we are still left in the very difficult position of being asked to grant this power, not only to increase benefits, probably by a substantial amount, but also to reduce benefits for children within the National Health and Industrial Injuries Schemes with no indication at all of how the power is to be used. That is our difficulty. The right hon. Lady says that this is a temporary power, but she knows

as well as we do that, once a new policy is introduced, even on a temporary basis, it has a substantial effect on the future pattern of arrangements for families.
The Minister has said that there will be a statement of the Government's intentions before the Summer Recess. Can she, at least, give an assurance that there will be an opportunity to debate that statement before we rise? Having admitted that we have a case, I am sure that she will agree that we should have some opportunity before the Summer Recess to discuss the promised statement. Such an assurance would, at any rate, go some way towards meeting what she herself agrees is a valid point.

Miss Herbison: I take the point, but I could not possibly, at this stage, say that there will be a full-dress debate. That must be discussed through the usual channels. In saying that, I should make it clear that the usual channels discussed the time that we should devote to this Bill. I will certainly keep in mind what the hon. Gentleman has said.

Amendment negatived.

The Temporary Chairman: Order. I am of the opinion that the principle of the Clause and the matters arising from it have been fully dealt with in discussion of the Amendments. Therefore, under Standing Order No. 47, I propose to put forthwith the Question, "That the Clause stand part of the Bill."

Mr. Houghton: On a point of order, Sir Ronald. I hesitate to question your Ruling, but this is a very important Clause, and with respect, it has not been fully dealt with in our discussion of the Amendments. One Amendment dealt with a matter that was not in the Clause at all, so I cannot see how that can be regarded as adequately covering the provisions of the Clause. The Amendment dealt solely with the procedure by which the Minister should act under the Clause. There has been very little discussion on this Clause today, and practically none on Second Reading, and I therefore submit that, perhaps, a few minutes could be spent on elucidation of the Minister's powers.

The Temporary Chairman: I would remind the right hon. Gentleman that subsection (3) was discussed with the


Amendment, so we have really covered the whole Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 6 and 7 ordered to stand part of the Bill.

New Clause No. 1.—(THE NON-PENSIONERS.)

The Minister shall make regulations in order to provide for the payment of a pension under the National Insurance Acts to any person who was over pensionable age on 5th July, 1948, and these regulations shall specify the amount of such pensions and make any other consequential amendments to the National Insurance Acts which are necessary for this purpose.—[Mr. Neave.]

Brought up, and read the First time.

Mr. Airey Neave: I beg to move, That the Clause be read a Second time.
It is, perhaps, only fair to the Committee that I should speak briefly. The principle of the Clause is that the Minister should have power to prescribe a pension where no contributions have been made. This was the point in the original Private Member's Bill that I tried to introduce some time ago, and in other Private Members' Bills which have been knocked on the head by the present Government by constitutional and, in one case, by unconstitutional means. That being the case, I want to refer to the anomaly involved.
I realise that this is not the only anomaly about which we have been talking, but in this case we have the fairly shocking case of 185,000 old people of an average age of 85 who have no retirement pension, being excluded from the whole scheme because they were above the pensionable age on 5th January, 1948. As anomalies go, one would have thought that remedying this one would have been given a very considerable amount of priority. A lot of the old people who write to me are now nearly 90 years of age, and for the House, the Government and both parties to have to confess that they have done nothing to deal with this state of affairs is thoroughly grave and unsatisfactory.
In answering me on many occasions—and I fancy that this will not be the last occasion on which I shall raise the matter—the right hon. Lady has drawn attention to the contributory principle, which we have already discussed. It would not now be in order for me to go wider than to say it is not much good talking about the contributory principle, particularly when these people are victims, as the right hon. Member for Sowerby (Mr. Houghton) would say, of National Insurance mythology. It is not much good talking about the contributory principle when the people concerned have never been allowed by law to contribute. The National Insurance Act, 1946, prevented them from contributing because they were out of age. It is unrealistic to go on arguing that people who have never been allowed to contribute should be excluded from benefit on the ground that contribution is an essential basis of National Insurance, and the suggestion that in some way we are cheating the contributor is not now widely accepted.
There is a growing interest in this problem of non-pensioners. While there have been references to the attitudes of both Front Benches, and particularly the attitude of my Front Bench in 13 years, it is rather a shame that the Front Bench attitude of the Labour Party should still be the same. I should like the Parliamentary Secretary to give some good reasons why this anomaly cannot be dealt with in view of the great age of these old people. Will he also say whether it is the subject of the review which has been discussed, because there is not very much in the point about the contributory principle?
We have agreed today that the whole actuarial position has changed since 1948 and that the amount which anyone receives on an actuarial basis is now very low, and if the State is subsidising the Fund why are not these non-pensioners entitled to the subsidy as a matter of justice? This must be an exceptional case. No rules apply to it and it must be a matter of humanity and an act of justice by the Government.
The original proposal was never for a full flat rate pension. The original proposal made it clear that the Minister should be given power—and she will have


that power under this Clause—to pay a reduced pension. One suggestion was that it should be part of the pension not covered by contributions, but after all these years it should be a pension as of right and it should be the full pension. The Clause would give the Minister power to devise a pension which covered the fact that these people had not contributed.
3.0 p.m.
The climate of opinion is changing and there is an aspect of the matter which ought to persuade the Government to consider this issue again and to do justice in this exceptional case, having regard to the passage of time and inflation and so on. This is the right hon. Lady's defence of her inaction in the matter—that because she is bringing more people on to the supplementary benefits, based on a means test, the claim of pension as of right in these cases is answered. But It cannot be answered by the argument that more people are on supplementary benefits because the right hon. Lady's Department does not know how many non-pensioners are covered by supplementary benefits. I asked a Question about this only the other day and the Ministry did not know the answer. The right hon. Lady said:
The effect of the generous disregards in supplementary benefits and the different treatment of capital has made it possible for anyone who is really in need, with quite a large sum of capital, to have help. We have done everything possible to help them by the supplementary benefits scheme."—[OFFICIAL REPORT, 3rd July, 1967: Vol. 749, c. 1384.]
I am sure that she does not want people to go on to 90 and then die off before she does anything about this problem. I am sure that she wants to devise some scheme which meets their needs. Giving me a factual answer to say that there are 400,000 more people on supplementary benefits does not meet the point of the argument and the right hon. Lady lays herself open to the charge of not dealing with the problem. The claim is for a pension as of right.
I do not know whether it is regarded as a fair argument—I do not think that it is—but the right hon. Lady said that some of these people were well off. Some people who have contributed and who receive the retirement pension because they were permitted to contribute are well off, and that is not a fair argument in

this case. I hope that the right hon. Lady will get to the heart of the problem and deal with it as a matter of justice.
Some of the letters which I receive are pathetic. Old people feel a sense of inferiority when they have no pension and yet live in blocks of flats or houses where others have pensions. Many members of the public are amazed to find that there are still 185,000 people without a retirement pension and yet of more than pensionable age.
Since there is no intention to press this new Clause, I will not make the matter any more unpleasant than it is. Many of these people have died since I first raised this matter, two and a half years ago, with a Conservative Government. Things cannot be allowed to continue as they are. If this matter is the subject of a review will the hon. Gentleman tell us what plans are likely to come forth as a result? In this case, unlike some of the other cases which, although serious enough, do not involve very great age, the old people cannot wait.
If this matter is the subject of a review action ought to be taken very soon indeed. If the new Clause was put into the Bill, the Minister would have the power to deal with this matter. I hope that we shall have a reply which will give encouragement to a very large number of old people who are completely left out of our welfare State scheme.

Mr. Pentland: I want to crave the indulgence of my hon. and right hon. Friends and hon. Members opposite who are sympathetic to the approach of the hon. Member for Abingdon (Mr. Neave) on this. I am more or less compelled to enter the debate at this stage. As the hon. Gentleman has said, we have debated this problem, upon which he has concentrated for so long, on three previous occasions, and I understand that it was brought up in another place some time ago. This is, therefore, the fifth time that it has been debated, and I pay tribute to the hon. Member's sincerity in bringing up this subject, and for his persistence in continually using every opportunity to do so. We know that this is a matter which is dear to his heart.
The hon. Member's intention is to provide pensions for those without retirement pensions, because they were too old to become insured under the National Insur-


ance scheme when it began in July, 1948. The wording of the Amendment is not restricted to those non-pensioners to whom he has been referring, but covers all people over pensionable age on 5th July, 1948. It is therefore defective because it covers all those entitled to pensions in July, 1948 who have been drawing their pension since that time.
There are 175,000 people without pensions, excluded from the scheme in 1948. The position of these people should not be considered in isolation. There are other groups with no retirement pension or a reduced pension. These include those who reached pensionable age after July, 1948 and who did not become insured, for one reason or another, and those who reached pensionable age after July, 1948 with less than a full record of contributions, resulting either in no pension or a reduced pension. All of these cases would need to be considered.
It is flying in the face of facts to say that the Government have neglected those whose age prevented them from being covered by the National Insurance scheme. Quite a few non-pensioners of all groups have already benefited by the new scheme of supplementary pensions, introduced last November. Whatever the hon. Member for Abingdon may think, this scheme gives elderly people a clear and virtually unqualified entitlement to a supplementary pension if their resources are below the guaranteed income level.
Under the Supplementary Benefits Scheme, the fixed limit of £600 which applied to savings under the National Assistance provisions during the time that the Conservative Party was in power has been abolished and it is now possible for a man to have savings of a little over £2,000 and still get a modest supplementary pension provided that he has no other income.

Mr. Higgins: Could the hon. Gentleman tell us what percentage of non-pensioners have benefited from the scheme which he mentioned a moment or two ago?

Mr. Pentland: As my right hon. Friend told the hon. Gentleman at Question Time recently, since the scheme was introduced 400,000 more old people have received supplementary pensions. It is

impossible to categorise, but 400,000 people—many of them being those about whom the hon. Members for Abingdon and Worthing (Mr. Higgins) are so concerned—will be receiving this supplementary benefit.
For all groups—non-pensioners included—the supplementary pension is the most appropriate instrument for flexible selectivity in providing financial help. The supplementary pension can always take full account of the varying burden of rent.

Mr. Pardoe: Means test.

Mr. Pentland: It is a test of income. If the hon. Gentleman wants to talk in those terms, he and I would disagree about the definition of "means test". I have sad recollections of means tests. In this context we are talking about a test of income in which people have a reasonable income and can still qualify for supplementary benefit. That is entirely different from the conception of "means test" as I have always understood that phrase.
The Amendment would provide a pension indiscriminately for all people in the group covered, irrespective of whether they needed a pension. In the Government's view, it would be unreasonable to use such a very blunt inflexible means of providing pensions when the Supplementary Benefits Commission scheme is already in existence and is doing very satisfactory work.

Mr. Neave: The hon. Gentleman is not really suggesting, is he, that the supplementary benefit based on a means test is a substitute for a retirement pension as of right?

Mr. Pentland: We have argued about this matter time and again. I know how the hon. Gentleman feels about it. Perhaps I am exaggerating, but if we were to do what has been suggested a widow whose husband left her £2 million would be entitled to a pension from the Government, even though she might be 75 or 85, simply because she or her husband had never had the opportunity to contribute to a contributory pension.

Mr. Eric Lubbock (Orpington): But a widow fortunate enough to have been left £2 million by her husband is entitled to a pension if she is only 60.

Mr. Pentland: Yes, because her husband contributed to the contributory scheme. The people about whom the hon. Member for Abingdon is concerned—I do not blame him for this, and I have already accepted his sincerity in the matter—are those who did not pay the contribution when they had the opportunity to do so—and of course some of them could not pay the contribution at that time. For the many people who are in need we have the Supplementary Benefits scheme. I therefore hope that the Committee will reject this new Clause.

3.15 p.m.

Mr. Higgins: I think the intervention of the Parliamentary Secretary was as inadequate as it seemed premature. He intervened at a very early stage in this debate.
On 25th November, 1964, I was glad to set out in my maiden speech the case for giving pensions to old-age non-pensioners who were left out of the National Insurance Scheme when it was introduced. On that occasion I said:
It is a fact that if one tells any member of the electorate that there are people in this country who are over 80 and who get no National Insurance pension, one will not be believed."—[OFFCIAL REPORT, 25th Nov., 1964; Vol. 702, c. 1344.]
A great deal has happened since that date. A number of Measures have been introduced, as pointed out by my hon. Friend the Member for Abingdon (Mr. Neave). The Government have resorted to various practices to prevent any progress being made on this matter, especially in the sordid filibuster in which they engaged when my hon. Friend endeavoured to introduce his Bill.
I stress that I do not believe this is in any way a partisan matter. Governments ever since 1948 have been mistaken in not including this group in the National Insurance Scheme. I do not speak in a partisan sense, but it needs stressing strongly. The situation is largely the same as that of two school children in an examination. If both get the right answer to a question the assumption is that they probably worked it out themselves, but if both get the wrong answer it is likely that someone is cribbing. The Government have come forward with completely spurious arguments. One cannot help but

feel that this must have been due to the persistence of bad advice which the Government have received.
It is high time that we had a serious answer to the whole analysis of the problem. I should stress at the outset that it does not seem that arguing for a flat rate pension for this particular group is in any way inconsistent with a view which is gaining wide acceptance both in this House and outside that our pensions and Social Security schemes generally should become more discriminatory and should apply to those in need. However strongly one supports that view, we still feel that a basic National Insurance pension should be provided. There is an equally strong case for giving a basic pension to this group, whatever one feels about the long run trend of social policy.
For this reason the argument of the Parliamentary Secretary was weak. He was arguing that the supplementary benefits scheme should enable more people to be helped. That is true, but it is untrue to say that the scheme helps all in this group of people, yet they are all entitled to a basic pension. If his argument had any validity, he should put forward exactly the same argument for National Insurance pensioners and therefore scrap the scheme. Unless he is prepared to advocate this method, there is no foundation for the argument which he had the audacity to put forward in the Committee this afternoon.
I turn to a Question which I asked the Prime Minister on 29th June. This is very relevant to the point which the hon. Gentleman made about the fact that we have had a number of previous debates on the subject of old-age non-pensioners. I asked the Prime Minister:
whether the public speech by the Chancellor of the Exchequer at Leicester on economic prospects on Saturday, 3rd June, represents Government policy.
The Prime Minister answered, "Yes, Sir." I then intervened and asked:
Is the Prime Minister aware that the Chancellor of the Exchequer said that, during the next 12 months, there will be a gentle but progressive improvement in the standard of living of every family? Can the Prime Minister tell us how this is to occur in the case of old-age non-pensioners who are not in receipt of the National Insurance pension and are excluded from having the Social Security supplementary benefits?


The Prime Minister replied with an answer which I can only describe as evasive. He said:
My right hon. Friend the Chancellor of the Exchequer was referring to the impact on all families of the growth rate he was discussing in his speech. There will be opportunity to debate the position of all old people, whether covered by pension or not, on the new Bill to increase the pensions…"—[OFFICIAL REPORT, 29th June, 1967; Vol. 749, c. 743.]
The point surely is that we must consider this question today in the light of the statement which was made by the Chancellor of the Exchequer in his speech, and which the Government now assure us is Government policy, namely, that over the next few months there will be a steady rise in the standard of living of everyone in this country. The fact of the matter is that this will not apply to many, if not all, of the people who are covered by this new Clause. It is for that reason that I believe the Government ought to accept it. I believe that if the Chancellor of the Exchequer gives a categorical assurance of this kind, and if the Prime Minister assures us that it is Government policy, they ought to take action which will enable it to be carried into effect. If they do not, we must judge them accordingly. I hope, therefore, that we shall have a further intervention from the Government, telling us that, if they do not accept this new Clause, how it is that the old-age non-pensioners are to share in the rising standard of living which has been promised to them by the Chancellor of the Exchequer and by the Prime Minister. The fact of the matter is that this group of people have been very unfairly treated indeed.
I do hope that we shall not have the hon. Gentleman constantly pointing to the clock. He may remember that on a previous occasion we on this side, who are concerned with the old-age pensioners, were worried about the clock, and I hope there will not be too much preoccupation with time on this occasion.
The point I am making is that, quite clearly, the Government's only defence on this particular matter is that they are relying on what they call the contribution principle—that because certain people have been fortunate in being allowed to contribute a certain amount, then they are

entitled to a flat-rate basic pension and to such other increases in that pension as the Government give them out of general taxation or out of the contributions made by those who have in fact not yet retired. I believe very strongly that this is a completely false principle, first of all because people in this group, the old-age non-pensioners, were not allowed to contribute to the National Insurance Scheme, and secondly, as has already been pointed out, because there is no clear and well-defined link which would allow one to call the contributory principle a principle. The fact is that the system is no longer based on any actuarial principle whatever, and the basic National Insurance pension is not coming from actual contributions: it is coming both from contributions, and from contributions of those who have not yet retired, and from general taxation.
To the extent that the National Insurance pension is not covered by the contributions, these people in this group whom we are seeking to cover by this new Clause are as entitled to any increase as is the basic National Insurance pensioner. Of course it is true, as the hon. Gentleman has pointed out, that the increase in supplementary benefits will help some of these people. We do not deny that, but we do say this is no substitute for a pension as of right, because people who are receiving the pension as of right also get National Insurance supplementary benefits if they meet the necessary qualifications. Therefore, it is essential that the non-pensioners, like the pensioners, should have a basic pension and an entitlement to supplementary benefit if they qualify.
We have never suggested that the pension for the old-age non-pensioner should be the same as that given to the contributory pensioner. We are saying it should be lessened by an amount which is covered by contributions of the National Insurance pensioner.
At all events, it is also true, as I well know from interview nights, and so on, that a number of people in this very elderly group—the average age is over 85—do not come along to apply for supplementary benefits. I am sure that many hon. Members seek to get people in this group who come along to them to apply for supplementary benefit. But it is not easy. We can be far from sure that we


are reaching them all, and the hon. Gentleman has no information on how many are covered by the supplementary benefit, as was clear from the answer which he gave.
I hope that the Minister will tell us what percentage of the total of old-age non-pensioners has been covered by the increase on which she sets so much store and which she put forward as an argument for not accepting this new Clause. There are some people who are just above the social security supplementary benefit level, but their real income has declined steadily since the war, and this is contrary to what the Chancellor of the Exchequer said in his speech. It is true even of those who are in the very wealthy group of old-age non-pensioners, because they are just as entitled as wealthy people amongst the basic pensioners who get their basic pension as of right rather than being subject to a means test. It is clear that this is something which needs urgent attention.
Since my hon. Friend the Member for Abingdon put forward his Bill, I understand that something like 75,000 old-age non-pensioners have died. It is a diminishing group. It is a group who feel very unjustly treated. It is a group who, even at this late stage, the Government ought to help by removing the sense of injustice which they feel and giving them a basic pension as of right.
For all those reasons, I have great pleasure in supporting my hon. Friend's new Clause.

Miss Pike: I do not intend to detain the Committee for more than a half-minute. We have heard the arguments very well put by hon. Members on this side of the Committee, and I would say again to the Government, please look at this again. Do not regard it as a partisan matter. When we were in office, I took the same position as the hon. Gentleman has now. I ask him to throw away his brief. We have had the courage to say that we were wrong and should have accepted these arguments. They are powerful arguments which should be accepted. Even at this late stage, I hope that the Government will say that they will look into the position and answer the arguments not with the old brief which we have heard so many times before but bearing in mind the social justice which these people require.

Mr. W. H. Loveys: I was hoping that the Joint Parliamentary Secretary would reply to my hon. Friend's request to give us some assurance that something will be done for these people. If only we had been given a little hope, I should have been prepared to tear up my notes, and I should have driven home tonight a lot happier than I shall having heard his adamant refusal to give us any assurance of help for this section of the community.
I know a large number of people in this category who are suffering at the moment. During Second Reading, my hon. Friend the Member for Melton (Miss Pike) referred to many of the anomalies, inequalities and social problems which are bound to be increased by any Bill which deals basically with an overall increase in the flat rate national retirement pension.
No one opposes the basic increase, but the most outstanding social injustice which will be increased is the position of the elderly retired non-pensioner who was over pensionable age on 5th July, 1948, and who is once again left out in the cold.
3.30 p.m.
A great deal has been said today about the need for human dignity for the individual and the need for a decent pension as of right. I should have thought that no one needed it more than the elderly people who get no pension at all. It was most distressing that, during Second Reading of the Bill, neither the Minister nor the Joint Parliamentary Secretary mentioned these people. It was left mainly to my hon. Friend the Member for Abingdon (Mr. Neave), whose interest in the matter is so well known, to deal with the non-pensioners. It was his Bill which was treated so disgracefully by the Government in 1965. When it was talked out the Minister said that there was no need to help these people because a special review was to be undertaken to see what action could be taken to help them. Since then there have been certain disregards, as the hon. Gentleman said just now, in respect of supplementary benefits, and different treatment of capital possessions, but all this is merely an increase in National Assistance, or what is now rightly called supplement to a pension, although it cannot be that for these


people because they do not receive a pension.
I was glad that the Conservative Party gave a definite pledge about this at the last election, and I would like to see it renewed from the Front Bench today if possible. I am not sure that it is really necessary to renew it, but, nevertheless, I hope that it will be, so that the country knows our position. It is all very well for the Government to say that a pension is not possible because he scheme is on a contributory basis. We know that the Supplementary Benefits scheme is subsidised by the State, and therefore is to some extent subsidised by the very people who receive no pension. One would have thought that the least that could be done for these people was that the amount of the scheme which was not covered by contributions could be given to them in the form of pensions.
That is all that will say. I know that time is getting short, and I promised to be brief. Many of my hon. Friends have dealt with the matter, and if we do not get any joy today it will have to be brought up again. Next Tuesday being a Supply Day, when we are to debate the problems of the elderly, there may be an opportunity to discuss this further. I know that the Minister is genuinely sympathetic to the older pensioners. I cannot understand why she seems to have allowed herself to be overruled by her Department in respect of these very elderly members of the community who have lived for so long and served the country well in difficult times. They have suffered more than anyone else from inflation over the years. They rightly feel aggrieved and, wrongly suffer hardship by the fact that they have no retirement pension.

Mr. Neave: As my hon. Friend the Member for Essex, South-East (Mr. Braine) wants to move to the next new Clause, I simply say that in view of the thoroughly unsatisfactory nature of the Government's reply we shall return to the charge very soon, and I have no intention of withdrawing the Clause.

Question put and negatived.

New Clause 2.—(WIDOW'S BENEFIT.)

Without prejudice to any other benefits to which she may be entitled under the National Insurance Acts there shall be payable a

widow's pension at the following weekly rates—

(i) 30s. a week to a woman widowed between the ages of 35 and 40;
(ii) 40s. a week to a woman widowed between the ages of 40 and 45; and
(iii) 50s. a week to a woman widowed between the ages of 45 and 50:

Provided that in all cases the woman had been married for a period of at least three years.—[Mr. Braine.]

Brought up, and read the First time.

Mr. Braine: I beg to move, That the Clause be read a Second time.
We have had a very interesting and constructive series of debates, and I shall be brief. One fact which has emerged from our discussions is that, unhappily, our social security system is riddled with a host of anomalies, and, judging from my postbag, they often strike the people who are affected as most unjust.
The most glaring examples are to be found in the way in which we compensate the breadwinner for serious injury or disease, or the wife for the loss of her husband, circumstances which inevitably change and nearly always worsen the pattern of a family's life. The two sets of circumstances are linked. It is not the extent of the injury or its incapacitating effect, but its cause which determines the social provision which we make. Similarly, it is not the fact of widowhood which determines whether a widow under 50 gets a small pension, but whether she was married before 1948 to a man who was insured under the arrangements then in operation. It is not the fact of widowhood and the circumstances in which the widow is forced to live which determines her entitlement to pension, but her husband's contribution record.
I have come to the conclusion that this is wrong and I do not mind admitting it. We all know that these anomalies were not deliberately contrived but have arisen from the way in which our social services have developed and expanded over the years. The late Conservative Government concentrated, quite rightly, on improving provisions for widowed mothers and their children. The present Government have abolished the earnings rule for widows and widowed mothers. That is an extremely useful step forward which we all welcome.
Yet the anomalies remain. Often they are grossly unfair. A woman of 45 suddenly widowed may very well have been out of employment for 20 years or more. She should certainly get some pension. The distinction between those married before and after July, 1948, is completely unrealistic and could result in two widows of exactly the same age, in identical circumstances, being treated differently one receiving 30s. a week and the other nothing. One of my constituents wrote to me a little time ago asking:
Why should some widows at my age have a pension while I have to go on paying contributions until I am 60? I too have lost my husband and I too am having a struggle.
The virtues of the right hon. Lady have to some extent worsened the situation because the inequity is all the greater since the widow who gets a pension is no longer subject to the earnings rule. This only serves to heighten the sense of injustice. One way of correcting the anomaly would be to give all widows now receiving no pension at all a pension of say 30s. a week between the age of 35 and 40 increasing progressively as suggested in the new Clause to the full rate when they reach the age of 50.
I do not doubt for a moment the sincere desire of the right hon. Lady and her hon. Friends to get rid of these anomalies. The right hon. Gentleman the Member for Sowerby (Mr. Houghton), whose speech we all enjoyed this morning, has rightly said that social security is about women or rather about the social insecurity of women. This is very true, and there is now evidence accumulating to show that the rigid qualifying age of 50 is too high. A woman widowed in her mid-forties often finds it very difficult to find employment, except of the most casual and unskilled kind. Those of us who see our constituents every Saturday morning know the difficulties of many women in this position. Suddenly their whole world has fallen apart with the death of their husbands—suitable employment is difficult to find.
Then again, women have been marrying younger and having their children earlier. Many find themselves, if widowed, on their own well before the age of 50, faced with the prospect of getting a job, which as I have indicated, can often be a difficult task, and paying contributions for a pension that they will not receive until they are 60.
In December, 1964, the right hon. Lady said that these matters were very much in her mind, and would be considered in the review upon which the Government were then embarking. She said:
… the age condition and the other provisions relating to benefits for widows are among what I consider to be the most important matters which we have to examine in the course of the review of social security provisions. The review will have to cover many matters, including the position of the existing widow who has failed to qualify under the present conditions."—[OFFICIAL REPORT, 3rd December, 1964; Vol. 703, cc. 793–4.]
The position of widows was last discussed in the National Insurance Bill in February, 1966. We were unable to get any information as to the Government's intentions. Since then a further 16 months have elapsed. I detected a certain sense of frustration in the speech of the right hon. Gentleman the Member for Sowerby when he referred to the dawning of the great day, when the review was finally presented to the nation and revealed to all.
When can we expect this review, in respect of a matter to which the right hon. Lady attached the highest importance in December, 1964—this year, next year, 1969, 1970, or on the eve of the next General Election? We are entitled to a clear answer on this point and I must tell the right hon. Lady that we shall go on pressing until we get it.

Mr. Pardoe: We are being subjected to the most appalling blackmail in being told to shut up, namely, that if we do not allow the Government to get the Bill—and the Government have presumably been promised the Bill by the Opposition—by four o'clock they will go round the country telling all the old-age pensioners that we did not let them have their increase. The whole debate, including the Second Reading debate, has been a shambles, and I hope that both parties are disgusted with their performance.

Miss Pike: I should like to point out that the Conservative Party was also blackmailed. We were told that if we did not allow the Committee stage to be completed today we should be responsible for not allowing the Bill to go through and for the pension not being paid. It is no wish of ours that the Committee stage should be rushed


through; we had no choice but to do it this way.

Mr. Pardoe: I am glad that the element of blackmail has had its due effect upon the Conservative Party. As I said, this has been a shambles. I merely want to say a brief word about an Amendment of mine, which has not been selected, but which would have met all the points that have been made, by providing that we should incorporate into our National Insurance system a lump sum life insurance policy giving a wife a lump sum when her husband dies, at whatever age. That would meet all the arguments put forward by the hon. Member for Essex, South-East (Mr. Braine).

Miss Herbison: This has been another short debate. I am grateful to both hon. Members who have spoken. The hon. Member for Essex, South-East (Mr. Braine) said that the provision for widows are riddled with anomalies. I have often said that the anomalies are legion. During the two-and-a-half years that I have been in this office I have often wished that I could have started with a clean sheet in social security. How much easier it would have been, without all the vested interests and anomalies which exist.
The hon. Member made some play about what I had said in 1964 and what I had said when presenting the previous Bill. He wondered when the review would finally be presented. This sort of thing is often said. Hon. Members do not seem to be aware that we have not waited until the whole review was finished before doing anything about it. As each part of the review has been completed we have brought it to the House. The part dealing with supplementary benefits has been of immense importance to thousands of people.
The hon. Member for Cornwall, North (Mr. Pardoe) has spoken about a lump sum payment for widows, under the impression that that would be a cure for almost all their troubles. I do not agree. We extended the 13 weeks of the widow's temporary allowance to 26 weeks, and under this Measure the amount will be increased. At whatever age a woman is widowed, if the necessary contributions have been paid, she now gets £5 12s. 6d. a week for six

months, and on top of that—under another piece of legislation that we brought forward—she gets the earnings-related benefit due from her husband's earnings.
If we add those together we see that they represent quite a large lump sum payment. After that, if the age condition is satisfied, the widow gets the pension weekly. I thought that the hon. Member might like to look at the existing position and how it matches the proposal.

3.45 p.m.

Mr. Pardoe: I spoke so briefly, in order to meet the Government's wishes, that the right hon. Lady may have misunderstood me. The lump sum is not instead of the present benefits but in addition to them.

Miss Herbison: It may be because the hon. Member spoke so briefly—and I understand his reasons for doing so—that I formed that impression.
In our review of the general provision which we shall make for earnings-related benefits, this is one of the matters to be considered. I am certain that there will be a change. The kind of change which I envisage is one in which I have always believed, with no cut-off. At present almost an hour can make the difference between getting a pension and not getting a pension. I suggest that there should be no cut-off but a minimum age and a maximum age and graduated payments between the two. That is what I have in mind. When we have the very big problems solved about earnings-related and disability pensions, that will be one of the matters of which we must take care.

Mr. Braine: I must confess that I found the right hon. Lady's reply somewhat disappointing. I acknowledge, as I said in my last speech, that the Government have taken some steps to improve certain social provisions in advance of the review, but her protestations would be more convincing if we had some assurance—which we have not been given so far—that this review will be produced very shortly. The disappearance of the right hon. Member for Sowerby (Mr. Houghton) from the ranks of the Government after his long labours and his known knowledge and enthusiasm for this subject suggests that there are more difficulties over the review than have been


revealed so far. There are probably deep divisions within the Government.
But the present is not the time to discuss that matter, and in view of the fact that the right hon. Lady is unable to give us any information as to when we shall get the review—it may be that she is not free to do so—I fear that I cannot withdraw the new Clause.

Question put and negatived.

Schedules 1 and 2 agreed to.

Schedule 3.—(PROVISIONS TO BE SUBSTITUTED IN SCHEDULE 4 TO INSURANCE ACT.)

Mrs. Lena Jeger: I beg to move Amendment 24, in page 11, line 42, to leave out from the beginning to the end of line 44.

The Deputy Chairman: It would be convenient at the same time to take the following Amendments:

Amendment 25, in page 11, line 44, to leave out '15 0 0' and to insert '50 0 0'

Amendment 26, in page 11, line 45, to leave out '30 0 0' and to insert '50 0 0'

Mrs. Jeger: The effect of the Amendment would be to make a more generous provision in the payment of death grants. It has always seemed to me that the age factor in the calculation of the death grant is rather uncharitable and rather mean. I know that it is part of our traditional legislation. In view of the shortness of the time, I simply draw my right hon. Friend's attention to the point and hope that if she cannot meet it now, she will consider it as one of the factors to be taken into account in the review.

Mr. Pardoe: May I say a few words about Amendments 25 and 26. These

seek to raise the death grant to£merely to bring it more into line with the present cost of dying. If there is an argument for having a death grant which helps one to get underground, it might at least bear some relation to the cost of doing so.

Mr. Loughlin: Like the hon. Member for Cornwall, North (Mr. Pardoe), I deprecate the high cost of burial. However, this benefit was never intended to be, or accepted as covering, the full cost of burial, but only a contribution towards the cost.
As for those who retired within 10 years of the start of the scheme, for whom only half the full rate of death grant is payable, these matters are complicated by the contributory nature of the scheme. It has been accepted by the Advisory Committee as reasonable, and we cannot at this stage make any promises to increase the grant to the full rate. I regret that I cannot give this promise, and I trust that the Committee will be satisfied with this brief reply.

Mrs. Lena Jeger: I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule agreed to.

Schedules 4 to 7 agreed to.

Bill reported, without Amendment; read the Third time and passed.

ADJOURNMENT

Resolved, That this House do now adjourn.—[Mr. Fitch.]

Adjourned accordingly at eight minutes to Four o'clock.